DonBrash.com

Home » Reserve Bank Governor

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  Partly as a consequence, there were also major changes in the note issue, with one and two dollar notes withdrawn and replaced by coins and the design of all other notes changed.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 since 1996.