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Reserve Bank Governor

Don was Governor of the Reserve Bank of New Zealand for almost 14 years, from September 1988 to April 2002. 

Towards the end of 1989, the Reserve Bank of New Zealand Act 1989 was passed into law, with effect from early 1990.  That legislation –

  • Established a relationship between the government and the Reserve Bank which was, at that time, internationally unique.  Previously, central banks had either been totally independent of government (such as the Bundesbank in Germany and the Federal Reserve Board in the US) or had been closely directed by the government of the day, often for short-term political purposes (such as the old Bank of England and the Reserve Bank of New Zealand).  The 1989 legislation in New Zealand created a new model by specifying price stability as the only objective of monetary policy, by requiring the Minister of Finance on behalf of the government to reach public agreement with the Governor on what price stability should mean during the term of a Governor’s appointment, and by holding the Governor accountable for delivering that outcome.
  • Led directly to the introduction of a formal inflation target (originally requiring the Reserve Bank to get inflation between zero and 2% by 1992), New Zealand becoming the first country in the world to adopt a formal inflation target.
  • Also led quite directly to the Bank’s adopting a highly transparent approach to the implementation of monetary policy, with a major effort devoted to explaining what monetary policy could and could not do – an effort which Don was heavily involved with personally.
  • By depriving the Reserve Bank of an automatic entitlement to the income arising from the currency issue (known as seigniorage income), drove a major push to improve the efficiency of the Bank’s operations such that total staff numbers dropped from some 550 in 1988 to around 185 when Don resigned as Governor.  Partly as a consequence, there were also major changes in the note issue, with one and two dollar notes withdrawn and replaced by coins and the design of all other notes changed.

This page sets out the main speeches from Don's time as Governor of the Reserve Bank.

An indebted people

25 January 2002

Speech to the Canterbury Employers Chamber of Commerce highlights the extent to which New Zealand has become highly indebted, and the risks posed by that situation

Inflation targeting 14 years on

5 January 2002

A summary of New Zealand’s experience of inflation targeting in a speech to the American Economics Association in Atlanta

Monetary policy in 'interesting times'

21 November 2001

The first speech in the third three-yearly road-show of 23 speeches to small and medium-sized businesses throughout New Zealand, this one in Whangarei

Faster growth? If we want it

2 August 2001

A speech to the Knowledge Wave conference in Auckland

Central banks: what they can and cannot do

30 March 2001

Speech to the Trans-Tasman Business Circle in Sydney outlining the limits of a central bank’s power

Making monetary policy: a look behind the curtains

26 January 2001

Speech to the Canterbury Employers Chamber of Commerce explains how the Reserve Bank goes about formulating monetary policy

The fall of the New Zealand dollar: why has it happened and what does it mean?

5 October 2000

Speech to the American Chamber of Commerce in Auckland explains the fall in the New Zealand dollar to its lowest level ever

Central banks and financial system stability in an uncertain world

6 June 2000

Speech to the Belgian Financial Forum in Brussels explains how the Reserve Bank of New Zealand sees its role in promoting financial stability

The pros and cons of currency union: a Reserve Bank perspective

22 May 2000

An assessment of the economic merits of a currency union, with particular reference to the adoption of the Australian dollar, in a speech to the Auckland Rotary Club

Will the Reserve Bank choke the recovery?

21 March 2000

Speech to the Auckland Regional Chamber of Commerce and Industry defends the Reserve Bank’s gradual tightening of monetary policy

Comments on accepting the NZIER/Qantas Economics Award

18 August 1999

Discusses the success or otherwise of the post-1984 economic reforms and criticizes professional economists for failing to explain those reforms to the public

Inflation targeting: is New Zealand’s experience relevant to developing countries?

17 June 1999

The sixth L K Jha Memorial Lecture at the Reserve Bank of India in Mumbai

Monetary policy into the new millennium

25 March 1999

Address to the Northern Club in Auckland discusses the framework within which monetary policy operates in New Zealand, and what New Zealanders can expect of that framework in the longer term

The New Zealand dollar and the recent business cycle

29 January 1999

The sixth in a series of annual speeches to the Canterbury Employers Chamber of Commerce, this one dealing with the fluctuations in the New Zealand dollar and the factors which had driven that

Myths about the Reserve Bank and property investment

18 August 1998

Speech to the Real Estate Institute of New Zealand debunking the view that the Reserve Bank is opposed to home ownership

New Zealand’s economic reforms: a model for change?

3 June 1998

A 1998 assessment of the post-1984 economic reforms, in a speech hosted by Chatham House, the Waitangi Foundation and Prudential Corporation in London

Monetary policy in New Zealand: business as usual

20 April 1998

Speech to the Auckland Chamber of Commerce defends an easing of monetary policy which led to a fall in the exchange rate but a rise in short-term interest rates

New Zealand's balance of payments deficit: does it matter?

30 January 1998

One of a series of annual speeches to the Canterbury Employers’ Chamber of Commerce, this one on the persistent balance of payments deficit

How fast can the New Zealand economy grow?

6 October 1997

Speech to the Auckland Rotary Club discusses the rate at which the New Zealand economy can grow in a sustainable way

Exchange rates, export prices and the Reserve Bank’s MCI

22 August 1997

Speech to the Counties Kiwifruit Growers Association in Pukekohe discusses the introduction of the Reserve Bank’s Monetary Conditions Index

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