After replacing the RBNZ Act 1989 with the Reserve Bank of New Zealand (RBNZ) Bill, altering the central bank's high-level objectives, powers, functions, governance, and funding arrangements, New Zealand’s central bank tease new governance amid early Wednesday, per Reuters.
“New Zealand's central bank said on Wednesday a new statutory governance board will begin work at the bank in mid-2022 following legislative changes introduced by the government,” said the News.
The piece also quotes RBNZ Governor Adrian Orr as saying, “Our new legislation clarifies what we're here to achieve, including promoting and protecting financial stability and ultimately the prosperity and wellbeing of all New Zealanders."
While giving details off the RBNZ Bill, New Zealand Finance Minister Grant Robertson said, “The new bill provides for a financial policy remit to be issued by the minister, setting out matters to which the Reserve Bank board must have regard, and also gives the minister the ability to direct the Bank to maintain a minimum level of capital.”
Additional comments
Key changes include the appointment of a new statutory governance board, which will be responsible for all decision-making except those related to the Monetary Policy Committee, the RBNZ said in a statement.
The Governor will remain chair of the Monetary Policy Committee, which determines New Zealand's interest rate settings and will also sit on the future board.
Market reaction
NZD/USD keeps bounce off one-week low, portrayed the previous day, following the news. That said, the Kiwi pair picks up the bids around 0.7010 amid an initial Asian session trading on Wednesday.
Read: NZD/USD meets a critical 4-hour resistance ahead of US CPI