Reserve Bank of Australia building at Martin Place. Generic RBA, interest rates. Monday 30th April 2012 AFR Photo by  Louie Douvis

"Good behaviour" ... Glenn Stevens' position hangs in the balance of two words. Photo: Louie Douvis

FEW institutions enjoy a position quite as lofty as that held by the Reserve Bank.

From its marble-lined headquarters in Martin Place, the Reserve is responsible for issuing currency, setting interest rates, and keeping the financial system in good health.

Unlike many money-hungry commercial bankers its staff are known for being squeaky clean and ultra-conservative.

Its independence from the government of the day is enshrined in law.

Never in its 52-year history has there been a wide-ranging inquiry into alleged wrongdoing at the bank.

Yet now it faces allegations senior staff members were told of bribery in subsidiary companies in 2007, but failed to take the information to the police until it was exposed by the media in 2009.

So what would it take for a Reserve Bank governor to bedismissed?

A professor of international finance law at the University of NSW, Ross Buckley, said any such move would hinge on two words in the Reserve Bank Act: ''good behaviour''.

''The governor of the RBA, for all the loftiness of his position, is still an employee of the government and the relevant minister is the Treasurer,'' Professor Buckley said.

''The Act provides for the Treasurer to appoint him, and the Act says that appointment is 'subject to good behaviour'.''

It's not exactly clear what ''good behaviour'' means and there is no precedent for the removal of a governor.

On the contrary, the list of six former governors is a roll call of eminent Australians, such as Bernie Fraser or Herbert Cole ''Nugget'' Coombs.

Professor Buckley said dismissing a Reserve governor was most comparable to the removal of judges - something that is rare and requires serious wrongdoing.

''Judges can only be removed for misbehaviour, but there's a procedure there, they're removed on a motion of both houses of Parliament,'' Professor Buckley said. ''There's no comparable procedure in the Reserve Bank Act.''

Professor Buckley stressed he was not asserting wrongdoing had occurred, but said there was a ''strong need'' for a judicial inquiry into the alleged corruption.

''The RBA is a fundamental building block in our economic system, almost part the fabric of the nation,'' he said.

''So if you have the governor or maybe deputy governors implicated in criminal acts I think you need a very thorough inquiry that has all the powers it needs to get to the bottom of what really happened."