The Reserve Bank of New Zealand said it will move some currency reserves offshore while its Wellington vaults are replaced.
Over the next five years, the central bank “will be transitioning currency reserves between eight sites, including Wellington and five offshore sites,” the RBNZ said in its 2014-17 statement of intent today. Due to design constraints, the current vaults in Wellington can’t be upgraded and this risk has been magnified by a series of earthquakes that shook Wellington last year, it said.
The central bank, which manages NZ$4.6 billion ($4 billion) of banknotes in circulation, doesn’t disclose the value of its reserves, a spokeswoman said. It will spend NZ$14.9 million on currency operations in the 2014-15 financial year, more than on any other function, today’s report shows.
The “substantial investment” in currency operations includes holding additional contingency reserves out of Wellington as well as modernizing the facilities and purchasing new note-processing machines in advance of introducing series 7 banknotes in 2015, the RBNZ said.
The new banknotes, which aim to improve design and security features, were originally intended to enter circulation this year.
“Higher levels of operating expenditure in our currency operations reflect significantly increased issuance costs as the volume of currency on issue has expanded,” the RBNZ said, adding that in the year ended April 30, 2014, the value of currency in circulation increased by 9.6 percent.