The Central Bank Of Australia

936 Words Sep 10th, 2015 4 Pages
In Australia, the role of monetary authority is split among three independent statutory agencies with specific responsibilities in the financial markets: 1.The Reserve Bank of Australia (RBA), 2. The Australian Securities and Investments Commission (ASIC), 3. The Australian Prudential Regulation Authority (APRA). And the three agencies are coordinated by the Council of Financial Regulators (CFR).

1. The RBA is the key monetary authority in Australia. The RBA is responsible for the conduct of monetary policy which affects the level of interest rate, the availability of credit and the supply of money. All of these have a direct impact on financial markets and institutions, and also on the level of economic activities (such as business investment, consumer spending and net exports) and the rate of inflation which is known as important sector in the economy.

There are three main ways the RBA can control the liquidity in the financial system. First, the RBA is managing the Exchange Settlement Funds (ESF) held by the Exchange Settlement Accounts (ESA) at the RBA. The ESF are the funds used to settle obligations among institutions and between institutions and the RBA. Second, the RBA undertakes the government transactions in the Commonwealth Government Securities (CGS) and the Foreign Exchange (FOREX). For example, the CGS is issued to the public by the government, and in this case, the money supply of the country will decrease. Third, the RBA controls the cash rate and…

More about The Central Bank Of Australia

Open Document