Australia injects $8.5bn into Reserve bank

The Australian government will make a one-off 8.8 billion AU dollars (almost 8.58 billion U.S. dollars) grant to strengthen the financial position of the Reserve Bank of Australia, Treasurer Joe Hockey announced Wednesday. According to him, this grant will enhance the Reserve Bank of Australia's capacity to conduct its monetary policy and foreign exchange operations. The Reserve Bank Reserve Fund currently sits at just 3.8 percent of the bank's assets at risk. "Since the election, the governor of the Reserve Bank has written to me indicating that the Reserve Bank Board believes that it would be appropriate for the Reserve Bank Reserve Fund to be increased to 15 percent of the bank's assets at risk," Hockey said. "Accordingly, the government injection of 8.8 billion Australian dollars into the Reserve Bank Reserve Fund to meet the 15 percent target will ensure that the bank is properly resourced, " he added. He also confirmed that Australia's financial system relies on the financial strength of the Reserve Bank and the credibility of its monetary policy and foreign exchange operations. According to him, 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.