Denison Miller died in office in 1923. The following year, a newly established Commonwealth Bank Board assumed overall control of the organisation. In 1920, responsibility for Note Issue had been transferred from the Commonwealth Treasury. The next two decades saw the Commonwealth Bank's responsibilities expand to encompass those of a central bank. These powers were codified by emergency legislation enacted during the early days of World War II.
During the Great Depression of the 1930s, the Commonwealth Bank was considerably enlarged by amalgamations with the State Bank of Western Australia (1931) and State Bank of New South Wales (1931). Together with earlier amalgamations in Tasmania and Queensland, this resulted in an expansion of retail operations into banking chambers and a proportionately less through post office agencies.
In World War II, the Commonwealth Bank was actively involved in the war effort both as an agent of the Federal Government and as banker for numerous scattered Australian and allied service personnel. As in the previous world conflict, many employees served with distinction. The war itself came to the organisation when some Northern Territory branches were evacuated due to enemy action.
Post-war legislation abolished the Commonwealth Bank Board, returning control over the organisation’s affairs briefly (1945-1951) to the position of Governor. A general bank division was established and special facilities created to provide finance for post-war activities such as housing construction and industrial development. Home loans, originally called ‘Credit Foncier’ loans, were first offered in 1946.
After World War II, hundreds of new branches and agencies were opened to cater for an immense increase and spread of population. Continuing war-time restrictions and a shortage of building materials meant many prefabricated structures were used. The Commonwealth Bank made special efforts to assist migrants with the establishment of a Migrant Information Service.
By the end of the 1950s, controversy over the organisation’s dual functions as a central bank on the one hand, and a trading/savings bank on the other, came to a head. Legislative changes in the form of the Commonwealth Banks Act 1959 and the Reserve Bank Act 1959 formally divided the two operations. The Reserve Bank of Australia was established on 14 January 1960 as the successor in law of the Commonwealth Bank, assuming control of all central banking activities. The remaining functions (trading/savings bank activities), together with the newly constituted Commonwealth Development Bank, became the Commonwealth Banking Corporation.