Reserve bank of australia - liabilities and assets - summary [A1-2]

A1 Reserve Bank of Australia – Liabilities and Assets

Liabilities:

‘Capital and Reserve Bank Reserve Fund’ includes the Reserve Bank Reserve Fund (RBRF), a general reserve which provides for potential losses arising from events which are contingent and non-foreseeable, mainly those which arise from movements in market values of the RBA’s holdings of Australian dollar and foreign securities. Where valuation losses exceed the balance in this reserve, they are reported within accumulated losses which are included in 'Other liabilities'. On 1 July 2001 the amount of $3 323 million (Contingencies and General Purpose Reserve) was transferred from ‘Other liabilities’ to ‘Capital and Reserve Bank Reserve Fund’.

Prior to July 1996 the series ‘Exchange settlement balances’ primarily reflected deposits of Australian banks, comprising non-callable deposits and, prior to September 1988, Statutory Reserve Deposits and deposits by savings banks. The Statutory Reserve Deposit requirement on trading banks was removed in 1988 and the non-callable deposit requirement was abolished in July 1999. The Bank commenced paying interest on Exchange settlement balances in July 1996. The rise evident from November 2013 reflects authorised deposit-taking institutions holding higher balances to accommodate payment exchanges that occur after the close of the cash market each day. These positions are funded by the Bank offering access to open repurchase agreements of a pre-determined size; this is reflected in a higher level of Australian Dollar Securities.

‘Deposits (excluding Exchange Settlement balances) include deposits of the Bank's customers, namely the Australian Government, overseas institutions, including the IMF and central banks, and state governments and authorities.

‘Other liabilities’ include current year earnings, the counterpart obligation arising from transactions in repurchase agreements, and obligations arising from the outright purchase of securities which have been contracted but not yet settled. Valuation reserves which reflect accumulated gains or losses on the Bank's assets from movements in domestic and foreign yields, and exchange rates, are also included (and may result in a negative balance being reported in this line item).

Assets:

‘Gold and foreign exchange’ assets include foreign exchange, which is invested in government securities and deposits, and IMF Special Drawing Rights. Foreign exchange is held outright and under forward contracts. Securities sold but contracted for purchase under repurchase agreements are retained on the balance sheet in this category.

‘Australian dollar investments’ include outright holdings of Australian Government Securities (AGS) and securities issued by central borrowing authorities of state and territory governments. Securities sold but contracted for purchase under repurchase agreements are retained on the balance sheet in this category. Also included are Australian dollar securities purchased but contracted for sale under reverse repurchase agreements, being: eligible bank bills, certificates of deposit and debt securities of ADIs; Australian dollar-denominated securities issued by certain foreign governments, foreign government agencies and by highly rated supranational organisations; and selected Australian dollar domestic residential and commercial mortgage-backed securities, asset-backed commercial paper and corporate securities.

‘Other assets’ include the Bank’s holdings of Australian notes and coins, Bank premises and other durable assets, and the Bank’s shareholding in the Bank for International Settlements. Clearing items, which include cheques and bills of other banks, bills receivable and remittances in transit as well as amounts owed to the Bank for overnight clearances of financial transactions, are also included in 'Other assets'.