In this week’s episode of the Afternoon Light podcast, Robert Menzies Institute CEO Georgina Downer speaks to the Reserve Bank’s Official Historian, Selwyn Cornish, about the history of central banking in Australia.

In 1960 the Menzies Government established the Reserve Bank of Australia, separating central banking from where it had evolved within the government-owned Commonwealth Bank. The first Governor of the Reserve Bank, Herbert ‘Nugget’ Coombs, said that a central bank ‘must grow like a living organism’, and so it is that over the years the RBA has established itself as a cornerstone of the Australian economy and as an institution which is immensely important to our system of government. Allegedly cut-off from political pressuring, it has the power and the responsibility to safeguard the nation’s prosperity.

But how did we get here? How did an institution established almost 60 years after Federation come to be so essential to the functioning of the Commonwealth? How had central banking evolved before the establishment of the RBA and why was Robert Menzies so keen to ensure that it was not connected with the Commonwealth Bank?

Selwyn Cornish is an Adjunct Associate Professor in the Research School of Economics at the Australian National University, and the Reserve Bank’s Official Historian. He is an Associate Editor of the forthcoming Biographical Dictionary of Australian and New Zealand Economists, and is writing the History of the Reserve Bank of Australia 1975–2000. His major research fields embrace the development and application of macroeconomics in the 20th century, and biographical studies of economists. In 2004 he was appointed a Member of The Order of Australia for services to secondary education in the ACT.