Australian Currency

On Friday, Jan 7^th, we visited the US Consulate and the Australian Central Bank.  At the US consulate we learned that the relationship between the US and Australia is very positive and that Australia has helped the US in nearly every war that we have been a part of.   Our speaker said that Australia and the US “grew up together” and have had a formal relationship since 1940.  According to the US-Australia Free Trade Agreement article, the trade agreement with Australia “is the most significant immediate reduction of industrial tariffs ever achieved in a US FTA, and will provide benefits for America’s manufacturing workers and companies.”  The free trade agreement has been especially significant for the winemaking industry.  The Wine to the USA article states, “Tariff reductions through the free trade agreement are important in price competitiveness, including in relation to Chilean and South African competitors given the FTA tariff reductions being implemented.”  The speaker also told us about his career in foreign relations and the different functions of the consulate office.  They renew US citizens’ visas, provide emergency services, document babies born abroad, and help US citizens who incur criminal charges abroad. 

After leaving the US Consulate Office, we went to Australia’s Central Bank.  Richard Finlay, a Senior Economist at ACB, spoke to us about the responsibilities and objectives of the Reserve Bank of Australia.   The article on the Reserve Bank of Australia states, “Monetary policy decisions involve setting the interest rate on overnight loans in the money market.”  This act keeps the economy stable and efficient.  Their objectives are specified in the Reserve Bank Act of 1959 and include “the stability of the currency of Australia, the maintenance of full employment in Australia, and the economic prosperity and welfare of the people of Australia” (RBA). 

The global financial crisis affected Australia, but not to the extent that it had affected America.  In the article, “Australia: Moving to a Seamless National Economy,” it is said that “Australia was the first G20 country to increase interest rates in the second half of 2009 in response to emerging inflation risks.” In contrast to America, Mr. Finlay told us that because Australia has a very strong economy, they must set the interest rates high in order to keep the economy stable and not let it get out of control. 

Australian exports to China have greatly improved in recent years and are making dramatic effects.  According to the Reserve Bank Bulletin-June 2008, “While there has been a significant slowdown in the pace of growth of each major export category since 2000, the sub-categories of coal and iron ore as well as education exports are notable exceptions, having broadly matched or exceeded their 1990’s average growth rate.”    

There are many distinct differences between the US Federal Reserve System and the Australian Central Bank.  Mr. Finley informed us that Australia’s job is easier because they have a smaller economy so it is therefore easier to control.  He also told us that the relationship between the Treasury and the Fed is more distant in America.  Also, Australia has more business professionals from various industries sitting on the Reserve Bank Board. 

Before leaving Australian Central Bank, we walked through their currency museum.  It was interesting to see how their currency has evolved over the years and what each bill represents.  So often we exchange the currency for goods, but rarely do we actually study the currency to see what kind of historical information it represents.