The Reserve Bank's Domestic Markets section (DM) is responsible for implementing monetary policy and managing liquidity in the banking system. It achieves this by forecasting both the Crown's and the Reserve Bank's liquidity flows, and conducting operations in financial markets to ensure actual overnight rates trade close to the Official Cash Rate (OCR). These include Open Market Operations (OMO), FX swaps, basis swaps and the repurchase of Government bonds that are soon to mature. DM also provides standby facilities for cash and Government bonds to registered market participants.
This Reserve Bank Bulletin article contains more details on how the Bank manages liquidity for the implementation of monetary policy.