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The Reserve Bank the central bank of Australia has a significant effect on our individual lives as well as on the national and international banking system In the process of carrying out monetary policy the Reserve Bank influences employment interest rates the availability of credit and even our standard of living A remark by the chairman of the board of Governors of the Reserve Bank can cause public reaction and affect the stock market worldwide W S Weerasooria 1996 p61 In recent years the Reserve Bank has taken on an increasingly larger role in the financial system Role of Reserve Bank of Australia lReserve Bank As Banker One of the original roles of the Reserve Bank was to provide basic banking service to member banks The Reserve Bank of Australia leaves deposit business and lending transactions with the corporations and individuals of the general public to financial institutions in the market and concentrates instead on being a bank of banks G Jay Francis Susan M Siegel 2001 p41 Banks maintain Exchange Settlement Accounts with the Reserve Bank These accounts are used to settle balances between banks arising from clearances of cheques They are used to settle transactions between the banks and reserve Bank arising from purchases and sales of government securities foreign exchange and Australian notes and coin The RBA has a banker-customer relationship with each of the nine companies it has authorized as dealers in the short-term money market and provides each with a line of credit to assist its liquidity The Reserve Bank Act directs the Bank insofar as the Commonwealth requires it to do so to act as banker and financial agent of the Commonwealth W S Weerasooria 1996 p67 The Reserve Bank provides a comprehensive range of banking services to the Commonwealth Governments of States The Reserve Bank maintains accounts in Australia currency for Australian depository for the International monetary Fund Asian Development Bank and the International Bank for Reconstruction and
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