An inquiry with the powers of a royal commission should be launched to investigate allegations of corruption in the ranks of the Reserve Bank of Australia, the Greens say.

Officials from the RBA's Note Printing Australia (NPA) went to Iraq and engaged in secret dealings with the regime of dictator Saddam Hussein at the height of UN sanctions, leaked reports have revealed.

The prospective business deal to produce polymer bank notes was abandoned when Australian diplomats uncovered the plan, the ABC and Fairfax Media reports.

Australian Greens Deputy Leader Adam Bandt says the revelations of "dirty deals" would shock most Australians.

"The stench surrounding the Reserve Bank and its subsidiaries is now so strong that only a full, independent judicial inquiry will clear the air," Mr Bandt told reporters in Hobart on Monday.

He said that when parliament resumes the Greens will move to have senior RBA officials face a parliamentary committee to answer the allegations, but that the government should not wait to act.

"The government must now immediately establish a full inquiry with the powers of a royal commission into the activities of the Reserve Bank," he said.

In light of the allegations Mr Bandt raised doubt about the effectiveness of the Australian Securities and Investments Commission (ASIC).

"It seems that our corporate regulator is asleep at the wheel when it comes to investigating the potentially corrupt activities going on within the Reserve Bank's corporate arms.

"There is a serious question now for ASIC to answer as to whether it is turning a blind eye to what is happening in the Reserve Bank."

The Greens also plan to demand answers from the corporate watchdog when parliament resumes.