Governor opts for decision by committee at Reserve Bank

Reserve Bank Governor Graeme Wheeler says he will retain veto rights in a new committee structure of decision-making. Photo / Mark Mitchell

The Reserve Bank is taking a more collegial approach to decision-making, with governor Graeme Wheeler announcing a governing committee of himself, deputy governors Grant Spencer and Geoff Bascand, and assistant governor John McDermott.

Speaking at the Auckland University business school yesterday, he said the committee would discuss all major monetary and financial policy decisions, including those on monetary policy, foreign exchange intervention, liquidity management, prudential policy (both micro and macro) and other regulatory issues.

"To date, individual governors have taken responsibility for particular areas of the bank, such as operations, monetary policy and financial stability. Going forward, governors will have more individual and collective involvement in key decisions taken across all areas of the bank."

The committee formalised and expanded past practice, and was the same framework adopted by the Bank of Canada. "As with the Bank of Canada, the governor retains right of veto on committee decisions."

Such committees brought strength, especially where uncertainty was involved, and could mitigate extreme preferences of an individual, he said.

Wheeler also flagged a more expansive approach to communications, increasing the frequency of on-the-record speeches and the number of people authorised to give them.

"We will also provide six-monthly briefings to the caucuses of the political parties, and are redesigning our website to expand its information content and increase its accessibility."

He said massive adjustments were taking place in government, corporate, financial sector and household balance sheets in economies which generated around two-thirds of world output.

"The spillovers from these adjustments and the fiscal and monetary responses to them can be especially challenging in small open economies ..."

The bank tried to accurately access the implications for New Zealand and be clear about what it could and couldn't influence.