Oan Central Bank
Te Peeke Pokapū Oa
|Let the Oan Isles remain prosperous (Me noho pai te Moutere Oa)
|Treasury of the Oan Isles
|Auroran Central Bank (monetary policy)
|8 January 1891
|Oan Central Bank Building (Whare o te Peeke Pokapū Oa)
|The Oan Isles
|Government of the Oan Isles
The Oan Central Bank (Te Peeke Pokapū Oa) is the central bank of the Oan Isles.It was founded in 1891 to help the government raise money, modernise the banking sector and prevent the hyperinflation precipitated by the Morsto-Oan War. Because the Oan Isles is a member of the Kirib Monetary Union, many of the price stability and currency control functions it performed when the Oan Isles used the Oan dollar (tara Oa) have been surrendered to the Auroran Central Bank. Nevertheless, it continues to act as a lender of last resort, manages the state's foreign exchange and gold reserves, acts as the banker of the government and regulates the Oan banking system. Governor Pauro Toangakau, who helms the organization, also represents the Oan Isles in the Board of Governors of the Auroran Central Bank. It is seated in the city of Tokapa.
Prior to the Morsto-Oan War (Te Pakanga o Nga Oa me Nga Morohotu) of 1855, all the islands and major merchant guilds issued promissory notes and tokens based on the value of precious metals such as gold and silver which they had available. The war with Morstaybishlia caused more goods and manpower to be directed to the war effort. Coupled with throttled trade, merchant guilds and island Chiefs had to issue more promissory notes and tokens than there was gold available to finance expenditure. The Oan Isles experienced hyperinflation, the worst in its history. The rapid loss of value of the currency at the time, led to the emergence of a black market that only traded in pure silver and gold.
Under Rangitanga-a-te-Moana Rangitake, the government issued a directive that all merchant guilds and the treasuries of island chieftains were required to keep their gold and the government would issue all promissory notes to be used by the nation. With a desire to move away from the Morsts, the Oans named the new money waahanga. This became the National currency, but this did not stop the cost of goods and services from skyrocketing and the government from taking on more debt. When the war ended, the government of Rangitanga-a-te-Moana Rangatike issued a Decree making it practically illegal to use gold in everyday transactions and bought all the gold in the country with new tara (dollar) notes and tokens (coins of low value metals). The Treasury of the Oan Isles was given the authority to control the volume of taras with the mandate of controlling inflation.
To prepare the country for future wars, the Oan government needed to raise capital and maintain price stability. It created the Bank of the Oan Isles in 1891 and transferred the monetary functions of the Treasury to the Bank. It gave the Bank the power to regulate banking institutions, act as the sole state banker and the sole issuer of legal tender in the country. This helped stabilized the national finances. The nation was also able to sell bonds at the markets in major financial centers such as Sani Bursil. The gold raised from these bonds was instrumental in preparing the country for the Great War (Te Pakanga Rawa Rawa).
The purpose of the Bank was to issue currency and maintain price stability by setting inflation targets and selling and purchasing securities to meet those targets. The secondary purpose was to ensure maximum employment, which led to the Bank keeping repo rates incredibly low. This role gradually faded as the bank modernized. Moreover, when the Oan Isles joined the Kirib Monetary Union, the Bank of the Oan Isles lost the power to directly influence price stability as the Auroran Central Bank now controls the availability, convertibility and supply of the kirib - the new legal tender.
As of 2021, the Bank the bank has the following functions:
- To indirectly influence the policies and decisions of the ACB through its participation in its governing structures,
- To act as a lender of last resort to banks within the country,
- To prescribe rules which control the banking sector within the Oan Isles,
- To be the sole banker of the government of the Oan Isles, that being,
- To advise the government of monetary and trade policy,
- To collect, analyze and report on economic data to aid the government in decision-making
- To administer control and manage, the Oan Isles' foreign exchange and gold reserves.
The Governor of the Bank is currently Pauro Toangakau. The Governor reports to the Council of Ministers of the Oan Isles on monetary issues within the framework of the bank. They control and supervise the daily operations of the bank and represent the bank to external institutions (for instance they sit on the board of Governors of the ACB). They are assisted by 3 Deputy Governors who administer areas within their competence.
The Bank is independent of the government. It has the freedom to set targets and administer its affairs without external political pressure. Nevertheless, it must answer for its actions to democratically elected politicians. Moreover, as the sole shareholder, the state has some powers over the bank. For instance, the Prime Minister has the power to advise the Rangitanga-a-te-Moana on the appointment of the Governor of the Bank on the recommendation of the Financial Advisory Board.
The Oan Central Bank was praised for its steadfastness in ensuring that the Oan currency was enviably stable and well-balance. Although it lost some of its currency control powers, it has been lauded for its professionalism and consistency. Opponents of the adoption of the kirib believe that the currency is overvalued and makes Oan goods and services (especially low-valued added goods like fish and timber) uncompetitive. While this is not a specific criticism of the bank, the Bank is often seen as a silent spectator, at best, and willing accomplice, at worst, of the globalist neo-liberal capitalist ideals that have led to the decline of key and historical Oan industries.