The Reserve Bank of Australia commenced operations with a mandate to oversee the nation's monetary policy, financial stability, and currency issuance. The transition arose from the need for a dedicated central bank, separating these functions from the Commonwealth Bank of Australia, which had previously held the dual role. The Reserve Bank Act 1959 outlined the new structure and responsibilities of the Reserve Bank, including the management of inflation and interest rates, along with regulating financial institutions to ensure stability within the banking system.

Located in Sydney, the Reserve Bank established policies that significantly influenced economic activities across Australia. Its first governor, Sir John Phillips, played a crucial role in shaping the new bank’s initial frameworks and operational strategies. The formation of the Reserve Bank indicated a shift toward a more modern understanding of central banking, mirroring practices in other advanced economies. The RBA engaged directly with fiscal policy and the government to manage economic challenges, fostering a cooperative environment for economic growth.

The establishment also allowed for the introduction of new banknotes and coins, enhancing the identity of Australian currency. The RBA's focus on a cohesive and responsive monetary policy aimed to adapt to changing economic conditions and maintain confidence in the Australian financial system.