The Bank of Papua New Guinea is the central bank of Papua New Guinea.
The Bank of Papua New Guinea is a corporate organisation and was established by the Act of Parliament (Central Banking Act, 1973) which defines its powers and functions. It commenced its operations on 01 November 1973 as the country's Central Bank with activities governed by the following statement of objectives:
"The Central Bank shall, within the limits of it's powers, ensure that it's monetary and banking policy is directed to the greatest advantage to the people of Papua New Guinea, and direct its efforts to promoting monetary stability and a sound and efficient financial structure." (Central Banking Act, 1973).
Prior to it's establishment the Bank of Papua New Guinea was a branch of the Reserve Bank of Australia
(RBA) in the then Territory of Papua and New Guinea. In 1971, the Select Committee on Constitutional Development established a Committee on Banking, which recommended a blueprint on the establishment of an independent banking system framework.
The Government first introduced it's intention of introducing a national currency
in July 1973 vesting the responsibility for the task in a currency working group comprising Department of Finance and the Port Moresby branch of the Reserve Bank of Australia (RBA). The kina and toea were eventually introduced as our national currency in April 1975.
Since it's inception the Bank has gone through a lot of changes to be up to where we are now. The Bank has amended the Central Banking Act to make it more independent, neutral and effective and to be free from political pressure and influence. We are still going through a lot of changes as we strive to meet the international standards and practices in all aspects of Central Banking.
The Central Bank act gives the Bank the necessary powers to fulfill its principle obligations under the Act, namely to carry on business of a central Bank. The Act was structured along the lines of the Reserve Bank Act, (1959) and other Australian legislation. Apart from the Central Banking Act the Bank has also incorporated the Banks and Financial Institutions Act and also administers the Savings and Loans Societies Act. These Acts have been amended at different times to make it relevant over time to meet the changing needs.
The hive of business activity and the need to house every employee under the same building saw a construction of a new premises to be known as the "ToRobert Haus" upon completion. It was named after the first Governor and built at the cost of sixteen million (K16, 000, 000) adjacent to the first building on Douglas Street in downtown Port Moresby. The building consisted of eight (8) floors with two (2) below the ground level containing the currency storage and car park facilities. The construction work on the building started in 1988 and was completed in 1991. It was officially opened by the then Prime Minister, Sir Rabbie Namaliu on 01 November 1991.
Since its inception in 1973 the Bank has been under the administration of six different governors. The first and the longest serving Governor of the Bank is Sir Henry ToRobert who served the Bank since it's inception in 1973 to 1993 for about twenty (20) years. His successor was Sir Mekere Morauta (current Prime Minister) who was in office for about 15 months from 31 July 1993 to 15 September 1994. He was replaced by Koiari Tarata who served from 15 September 1994 to 08 April 1998 for a period of three (3) years and seven months. Mr. John Vulupindi replaced Mr. Tarata as the Governor and served as a Governor for only four (months) in 1998 before being replaced by Mr. Morea Vele. The year 1999 saw a career central banker and the current incumbent Mr. Leonard Wilson Kamit take over the reigns from Mr. Morea Vele. The Bank over a very short period of time went through a lot of changes with the in its governorship.
The Bank of Papua New Guinea will continue to adjust and change to be on par as the other Central Banks
and the financial community world wide to provide up to date services to the people of Papua New Guinea.
Objectives of the Central Bank
For the advantage of the people of Papua New Guinea, the objectives of the Central Bank are:
Functions of the Central Bank
- To formulate and implement monetary policy with a view to achieving and maintaining price stability;
- To formulate financial regulation and prudential standards to ensure stability of the financial system in Papua New Guinea;
- To promote an efficient national and international payments system;
- Subject to the above, to promote macro-economic stability and economic growth in Papua New Guinea.
- In pursuance of its objectives the Central Bank may:
- issue currency;
- act as banker and financial agent to the Government;
- regulate banking, credit and other financial services as empowered by this Act or by any other law of the Independent State of Papua New Guinea;
- manage the gold, foreign exchange and other international reserves of Papua New Guinea;
- perform any function conferred on it by or under any international agreement to which Papua New Guinea is a party;
- perform any other function conferred on it by or under any other law of Papua New Guinea.
- The Central Bank shall advise the Minister as soon as practicable where it considers that a body regulated by the Central Bank is in financial difficulty.
The Bank of Papua New Guinea is a Contemporary Central Bank and Regulator employing best practice in Development of Monetary Policy, Financial Sector Supervision and Payments System.
- "With INTEGRITY we build good governance and credibility".
- "With TRANSPARENCY our decisions stand scrutiny".
- "With EFFICIENCY we produce quality results, on time, on budget".
- "Through ACCOUNTABILITY we take responsibility for our decisions and actions".
- "Through TEAMWORK we benefit from sharing skills, knowledge and experience".
- "Through PROFESSIONALISM we strive for best practice".
As of November 2000 the Bank had a total workforce of 252 staff, comprising of 101 female and 151 male officers.
In October 1997 an organisation review was carried out which resulted in the adoption of a new organisation structure. The Board approved the structure in November 1997. The structure was implemented in 1998.
The structure was designed to suit this modern business environment in particular, these key concepts:
- Customer oriented;
- Based on functions;
- Allows for cohesive departments;
- No overlapping functions;
- Facilitates clear flow of communication;
- Facilitates accountability;
- Cost effective;
- Decentralized where appropriate;
- Reduced number of reporting levels.
There are ten (10) Departments in the Bank. A department manager, who reports directly to the Governors (Governor and two Deputy Governors), heads each of the departments.
Seven functions relate directly to serving the Banks primary roles and three, play key supporting functions to complete the Banks organisational structure.
The seven Departments that perform the primary functions are:
- Financial Markets;
- Financial Systems;
- Exchange Control;
- Finance & Administration;
The three key support functions are:
The Papua New Guinea Payment System
- Internal Audits;
- Human Resources;
- Information Technology.
The Papua New Guinea payment system is still very much paper and cash based where cheques and cash transactions are the most common means of settlement, although some electronic type payment is also used. Cash remains the dominant means of payment both among the minority working class and the rural population. In the urban centres, within the employment sector, cheques, eftpos, credit cards, direct bank and post office transfers are some of the methods of payment used. Between Banks, bank warrants can be used for special clearance on large value cheques.
The use of cheques as a means of payment is declining. This decline is due to employers both in the government and private enterprise making direct payment of salaries and wages of employees to beneficiaries' bank accounts. Another contributing factor is that with the availability of eftpos facilities, more workers are using eftpos to make payments for goods and services, as an alternative to cash or cheque.
- Currency of Papua New Guinea:
- Papua New Guinean kina
- List of Central Banks:
- Central Banks
- Official website of Bank of Papua New Guinea:
- Exchange Rate of Bank of Papua New Guinea: