It would have taken quite a few years to rebuild the central bank's reserves without federal government help, governor Glenn Stevens says. Treasurer Joe Hockey last week announced the government would inject $8.8 billion into the RBA to strengthen its financial position.
The one-off grant followed a request from the RBA for money for its Reserve Bank Reserve Fund, which is used to partly offset assets at risk and enhance its monetary policy and foreign exchange operations. In recent years the fund has been impacted by a high Australian dollar, leading to a decline in the value of the RBA's foreign assets and capital reserves to a level well below that deemed prudent.
"While this rundown in capital in the face of a very large valuation loss was exactly what such reserves were designed for, we considered it prudent to rebuild the capital at the earliest opportunity," Mr Stevens told investors in Sydney on Tuesday. "That rebuilding could in fact have taken quite a few years, given the low level of earnings."
The (Abott) government's decision meant this could now occur much faster. "The effect of this is that instead of it taking many years to rebuild the capital, it will occur in the current year," Mr Stevens told Citi's 5th Annual Australian and New Zealand Investment Conference. "This results in a stronger balance sheet on average, and makes it likely that a regular flow of dividends to the commonwealth can be resumed at a much earlier date than would otherwise have been the case."
aap 29/10/13 (part)
So Joe Hockey has basically fixed the plundering by labor very quickly. This story will not be on the front pages, but it speaks volumes for the government's actions in stabilising and securing our economy, and quickly, -and quietly.
