The Reserve Bank of New Zealand is New Zealand’s central bank. It was established in 1934, and although not a government department, has been wholly owned by the government of New Zealand since 1936. Sometimes informally referred to as the Reserve bank, or simply RBNZ. The Reserve Bank is primarily a policy organisation with three main charges:
- formulate and implement monetary policy to maintain price stability and support maximum sustainable employment
- promote the maintenance of a sound and efficient financial system
- meet the currency needs of the public
The monetary system in New Zealand is based on fiat and fractional reserve banking. The Bank by virtue of the Reserve Bank Act has the sole right of issuing New Zealand legal tender notes and coins. The Reserve Bank controls the issuing of currency to banks and also replaces used and damaged money from circulation.