Australia Gives $8.5 Billion to the RBA

R

rbaggio

Active Member
Silver Stacker
Haven't seen this reported anywhere else

Australia Gives $8.5 Billion to Central Bank

Posted on 23 October 2013 10:45 | DOW JONES INSTITUTIONAL NEWS

SYDNEY--Australia's Treasurer Joe Hockey said the government would give the nation's central bank a $8.8 billion Australian dollar (US$8.5 billion) one-off cash injection to help meet global challenges.

"This grant will enhance the bank's capacity to conduct its monetary policy and foreign-exchange operations," Mr. Hockey said in a statement Wednesday. The Reserve Bank of Australia's Gov. Glenn Stevens requested the funds, according to the statement.

"Australia's financial system relies on the financial strength of the Reserve Bank and the credibility of its monetary policy and foreign-exchange operations," Mr. Hockey said.

"This injection of funds puts beyond any doubt the Reserve Bank's continued ability to perform its core monetary policy and foreign-exchange functions, in an environment of heightened financial market volatility," he added.
Click to expand...

src: http://www.asx.com.au/prices/market-news-detail.htm?an=DJDN000020131023e9an0000s
 
More info from Bloomberg:

Australian Treasurer Joe Hockey will inject A$8.8 billion ($8.5 billion) into the central bank's depleted reserve fund, increasing its flexibility to tackle renewed currency strength.

The transfer will bring the balance of the Reserve Bank of Australia's main capital buffer equal to 15 percent of its assets at risk, a level deemed by the RBA board as sufficient to place it in a strong financial position, Hockey said today in a statement. It currently stands at 3.8 percent.

"This injection of funds puts beyond any doubt the Reserve Bank's continued ability to perform its core monetary policy and foreign exchange functions, in an environment of heightened financial market volatility," Hockey said.

The RBA's capital buffer has been depleted by the sustained strength of the Australian dollar, which weighs on the local value of its foreign assets. Governor Glenn Stevens urged Hockey's predecessor to refrain from taking a dividend for the year to June 2012 to allow the central bank to rebuild the fund. Then-Treasurer Wayne Swan, in defiance of Stevens's advice, requested and received a A$500 million payment from the RBA as the government sought to balance its books.

"The RBA now has more capacity to absorb unforeseen losses on foreign-exchange and bond holdings," said Sally Auld, a interest rate strategist at JPMorgan Chase & Co in Sydney. "This will make some people consider whether the RBA are about to meaningfully up their foreign-exchange reserves or intervention."
Shock Absorber

The reserve fund stood at A$1.9 billion, Stevens told a parliamentary panel in Canberra on Feb. 22. Hockey's statement shows the balance at A$2.5 billion.

The Australian dollar has risen 9 percent since Aug. 30, the best performing group of 10 currency after New Zealand, as confidence indicators rebound and the U.S. Federal Reserve is expected to delay tapering.

The transfer will detract from the underlying cash balance in the 2013-14 financial year, Hockey said today.
Click to expand...
 
Thats about how much they borrowed from TARP after the GFC, maybe expecting a similar event again?
 
"Australia's financial system relies on the financial strength of the Reserve Bank and the credibility of its monetary policy and foreign-exchange operations," Mr. Hockey said.
Click to expand...

How credible can its monetary policies and operations be if it has to get money from the taxpayer?
 
"The RBA now has more capacity to absorb unforeseen losses on foreign-exchange and bond holdings," said Sally Auld, a interest rate strategist at JPMorgan Chase & Co in Sydney. "This will make some people consider whether the RBA are about to meaningfully up their foreign-exchange reserves or intervention."
Shock Absorber

Sounds like their preparing for the inevidable :o
 
Nah :rolleyes:

Just banksters doing what banksters do,......... steal from the poor and Pi$$ it down the drain. :lol:

Keep stacking

Kind Regards
non recourse
 
Some interesting background in today's papers. I loved the line "If the treasurer hadn't read page 103 of the annual report, he either didn't understand his job or he was taking a very huge risk with the Australian economy with a one-sided bet."


Ex-Reserve Bank board member Warwick McKibbin accuses Wayne Swan of economic vandalism
I'm still confused about why the issuer of currency - who regularly increases the monetary base - needs the Government to take out a loan from others to give currency back to them.
 
bordsilver said:
Some interesting background in today's papers. I loved the line "If the treasurer hadn't read page 103 of the annual report, he either didn't understand his job or he was taking a very huge risk with the Australian economy with a one-sided bet."


Ex-Reserve Bank board member Warwick McKibbin accuses Wayne Swan of economic vandalism
I'm still confused about why the issuer of currency - who regularly increases the monetary base - needs the Government to take out a loan from others to give currency back to them.
Click to expand...
Maybe the idea is that they can't actually use any of what they create? Like a protection against what happened in the US where the fad just handed out billions around the world lol.
 
Good point, it's probably the look of the thing. Helps avoid a technical insolvency through realised asset losses.
 
Had a look at the RBA site, and it still has its 'Reserve Assets' at over $50 Billion.

Not sure about the market valuations.


OC
 
Very confusing, I could only surmise myself that whoever is the beneficiary / share holder of the RBA is not happy with the lowering of the interest rates as it has effected their bottom line / profits.

Now to make up for the shortfall without raising the real interest rates they have put pressure on the Government to borrow more cash at interest and lend it back to them at no interest. This will effectively then make up for the shortfall in their profits by taking in from the Tax Payer.

Expect some new creative taxes to be invented soon.
 
Section 51 (xiii) of the Commonwealth of Australia Constitution states,

Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to,

(xiii) banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money;

Therefore the Government if it chose to do so could issue money without debt for the building of infrastructure ect, although it however chooses to borrow money at interest which in turn leads to higher taxation.

I guess they would be hesitant to do so if history is any thing to go by,

Hitler issued government issued currency independent of a bank interest free and built up Germany to be a power house economy, after the disaster of the Weimar Republic hyper inflation years prior. And we all know what happened there.

President Lincoln issued government issued currency called green backs, independent of a bank interest free, and he was assassinated.

President James A Garfield had similar belief's and he was assassinated

On June 4, 1963, President J F Kennedy issued an Executive Order

which called for the issuance of new currency, it was to be issued debt and interest-free. He was also assassinated

So it appears that those who were brave enough to issue debt free currency didn't have a long and lasting life.
 
You must log in or register to reply here.
Back
Top