The Treasurer has issued a Statement setting out the common understanding between the Reserve Bank and the Government on the Reserve Bank’s role in managing monetary policy.

The Statement refers to the Reserve Bank’s role in maintaining financial stability:

The Reserve Bank’s mandate to uphold financial stability does not equate to a guarantee of solvency for financial institutions, and the Bank does not see its balance sheet as being available to support insolvent institutions. However, the Reserve Bank’s central position in the financial system, and its position as the ultimate provider of liquidity to the system, gives it a key role in financial crisis management. In fulfilling this role, the Reserve Bank will continue to co-ordinate closely with the Government and with the other Council agencies.