Establishment of the NRBT
In November 3, 1988 the Legislative Assembly approved the National Reserve Bank of Tonga Act. The NRBT started its operations on July 1 the following year. The NRBT was first housed on the third floor of the Royco Building in Nuku’alofa. The bank started with 6 staff members. Because of the absence of proper storage room for the notes and coins, these values were temporarily stored in the vaults of the Treasury. In the meantime, the NRBT started preparations for the construction of its own office building. According to the National Reserve Bank of Tonga Act, the NRBT must have its office in Nuku’alofa. There were two options: building the office on land between the post office and the Bank of Tonga or on a more spacious plot of land on Queen Salote Road. Due to its better accessibility, the choice fell on the second option. The foundation stone of the building was laid by King Taufa’ahau Tupou IV on May 8, 1993. The construction lasted around 15 months and His Majesty opened the new building on April 21, 1994. The original authorized capital of the NRBT was $2,000,000 pa'anga, of which $1,000,000 million was paid up until 2007 when authorized capital was increased to $5 million by the NRBT (Amendment Act) 2007. The Government owns all capital stock.
Organisation Structure of the NRBT
The Governor of the NRBT serves as the Chief Executive Officer. He shall be a person of recognized experience in financial and banking matters, and is appointed by His Majesty in Council on the recommendation of the Minister after consultation with the Board for a term of 5 years. His term is renewable. The Governor is assisted by Deputy Governor(s) who in the absence or incapacity of the Governor shall act as the Governor. The number of staff increased from 6 at the establishment of the Bank to 63 at the end of June 2008. Despite this increase, the NRBT is still one of the smallest central banks in the world.
The governing body of the NRBT is the Board of Directors. The Board consists of the Governor who is the chairperson of the Board, the Secretary for Finance (or an alternate nominated by the Minister) and five other Directors, who are appointed by the Minister with the consent of His Majesty in Council for a term of 5 years and renewable. Meetings are held at least once every 2 months. Decisions are adopted by a simple majority of the votes of the Directors present in the meeting. In case of more far reaching monetary policy decisions, the Board sends policy advice to the Minister of Finance who subsequently sends advice to the Privy Council. The Privy Council, finally, decides on the policy recommendations. The Governor and the management of the NRBT are responsible for the implementation of the policy decisions taken by the Board. The NRBT is organized in three Groups namely the Research Group, the Corporate Services Group and the Financial Markets/Institutions Group (refer to Organisation Structure.
The Research Group carries out research on economic and monetary developments and formulates monetary policy. The Corporate Services Group is responsible for the issue of currency and conducts supporting activities for the NRBT. The Financial Markets/Institutions Group is responsible for orderly market conditions in the domestic and foreign exchange market in Tonga and supervises licensed financial institutions. Each Group comprises one or more departments. On a Group level, regular meetings are held between the management of the Groups and the Governor and the Deputy Governor. The relevant policy recommendations made and adopted in these Committees are sent for consideration and approval by the Board of Directors.