Role of Reserve Bank of Australia (RBA)

The role of the Reserve Bank of Australia (RBA)
As the central bank of Australia, the RBA is solely in charge of the country’s monetary policy
implementation, distributing and handling the Australian dollar, ensure the financial system’s
stability, maintain an efficient and safe payment method, and through Exchange Settlement
Accounts (ESAs), it is the banker for commercial banks which allows the RBA to control interest
rates. The campaign of the RBA started in 1959 under the Reserve bank act.
The role of the Central Bank of Sri Lanka (CBSL)
The CBSL maintains economic and price stability as well as financial price stability while
supporting and advancing the creation of useful resources in the country. And in the case
where a commercial bank is undergoing a supply shortage, the central bank takes care of the
economy’s funds. Through the years, it was seen that the central bank best works when it stays
independent from the fiscal policy of the government and is not affected by political matters.
The CBSL was established by the Monetary Law Act in 1949.
Conduct of Monetary Policy
Stability of the financial system
For the main purpose of promoting financial stability, the Australian Prudential Regulation
Authority (APRA) provides cost-effective guidance to financial institutions as this policy
framework affects both the RBA and the APRA. Even though it is the bank’s obligation to
increase financial stability, it does not mean that the financial institutions viability is certified
and this results in the institutions’ balance sheets not being available. However, the bank and
the Council of Financial Regulators (CFA) continue to carry on the status as the system's primary
source of liquidity.
The CBSL uses macro and micro prudential policy to control the stability of the financial system.
Macro prudential policy entails keeping an eye on the entire
financial system while using precautionary measures to reduce systemic risks and shield the
essential financial services needed for conducting economic activity from
disturbance.Microprudential policy is where risks are reduced and financial institutions are
improved to maintain integrity through the use of prudential measures and regulation and
managing of those institutions.
The CBSL uses macro and micro prudential policy to control the stability of the financial system.
Macro prudential policy entails keeping an eye on the entire financial system while using