The Reserve Bank of Australia (RBA) is set for a shake-up, following a review commissioned by the federal government.

The review made 51 recommendations, including specific measures to create a clearer monetary policy framework and stronger monetary policy decision-making.

Treasurer Jim Chalmers said the government agreed in-principle with all the recommendations and would work with the RBA and parliament to implement them.

Subject to consultations with the opposition, the Treasurer said the government would introduce legislation to:

• Reinforce the independence of the RBA in the operation of monetary policy
• Split the RBA board into two – with one board to oversee monetary policy and the other governance
• Strengthen the RBA’s mandate
• Clarify that Australia’s monetary policy framework will aim for both price stability and full employment

Treasurer Chalmers also said the government would institute a more transparent process for appointing external members to the RBA boards.