This paper examines how major efficiency gains and improved effectiveness were simultaneously achieved at the Reserve Bank of New Zealand over a five-year period. It identifies the business management concepts that were used to transform the organization, outlines how they were applied, and evaluates the benefits obtained. The paper concludes that substantial real efficiency gains were achieved, while effectiveness was maintained or enhanced. Looking more widely, the business management concepts used to achieve these benefits could be applied to other central banks.
internal audit services, reporting directly to the Governors, but does not have department status.
P = Primary responsibility for Function
R = Review responsibility for Function
C = Contributory responsibility for Function
S = Services provided Internally
Source: Reserve Bank of New Zealand
Strategically, the new accountability mechanisms have worked well. The RBNZ’s price stability objective has been made concrete by specifying target inflation ranges, set out in formal public agreements between the Minister of Finance and the RBNZ. 11/ RBNZ