Reserve Bank Governor
In 1988 Brash became Governor of the Reserve Bank of New Zealand, a position which he held for the next 14 years. Brash consistently met Government-set targets to keep inflation within 3% during his time as Governor, and during his tenure interest-rates dropped from double-digit to single-digit percentages.
Aside from monetary policy, Brash presided over significant changes in banking supervision, with the New Zealand approach emphasising public disclosure by banks regarding the nature of their assets and liabilities. Under his Governorship, the Reserve Bank of New Zealand established a new model of the relationship between government and central bank – not totally independent, like the Bundesbank in Germany, and not dominated by government, as was typical of most central banks at the time, but one where government and central bank agreed in public about the inflation rate to be delivered by the central bank, where the central bank had full independence to run monetary policy to deliver that, and where the central bank's Governor was held accountable for the inflation outcome. It was the Reserve Bank Act 1989 which established this contractual relationship (based on price stability targets) between the Bank and the Government, rather than giving direct control to Ministers of Finance.
Changes took place in the currency used in New Zealand during Brash's tenure, notably the introduction of polymer banknotes, and the replacement of Queen Elizabeth's face on most of the banknotes. Many banknotes in circulation still carry the signature of Brash from his term as Governor.
There is a range of opinion on Brash's performance as Reserve Bank Governor. The New Zealand Association of Economists describe Brash's success in establishing an independent central bank with an inflation target and in reducing inflation as a highlight of his career. Documentary maker Alister Barry described Brash as "an extremist, an idealist" who's "ideal world is where the free market reigns supreme". Barry considered that Brash manipulated public opinion towards neo-liberal economics and gave as examples Brash's advocacy for abolishing the minimum wage and his Hayek Memorial Lecture to the Institute of Economic Affairs in London.
Read more about this topic: Don Brash
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