Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search


Reserve Bank releases Financial Stability Report

Reserve Bank of New Zealand

15 November 2006, 10.00 am

Reserve Bank releases Financial Stability Report

The Reserve Bank today released its Financial Stability Report, a twice-yearly report that assesses the health of the New Zealand financial system. The report covers developments in financial institutions, foreign exchange and debt markets, and payments systems. It also comments on recent financial policy developments.

The Reserve Bank Governor, Dr Alan Bollard, commented: "Banks continue to appear well capitalised and continue to return strong profits. However, banks are competing in an aggressive manner, accepting lower margins and higher risk loans in their efforts to retain and grow market share in mortgage lending."

"With the household sector already saddled with considerable mortgage debt, any increased strain to service these debts, such as reduced incomes or higher interest rates, and unexpected decline in house prices, would impact negatively on the quality of banks' balance sheets.

"The Reserve Bank will be watching such developments closely, in particular as it implements new capital standards for banks that aim to ensure they have a sufficient buffer against unexpected losses," he said.

Dr Bollard said that "the Bank continues to expect the New Zealand economy will rebalance through a gradual slowdown in domestic spending and a reduction in the current account deficit."
"However, New Zealanders continue to be heavy users of foreign savings to largely finance housing. This leaves us vulnerable to any change in global perceptions of New Zealand's credit worthiness. A turn for the worse in such perceptions would push New Zealand's longer-term interest rates up and possibly force a more rapid rebalancing in the current account deficit than is comfortable." he said.

"The New Zealand foreign exchange market is also experiencing a high level of foreign investor attention as global investors make use of New Zealand's interest rate differentials. Given the inherently cyclical nature of such flows, a shift in expected interest rates globally could lead to an outflow of speculator funds and volatility in the New Zealand dollar exchange rate."

Dr Bollard concluded by noting that legislation has recently been passed in New Zealand, and is progressing in Australia, that formalises each other having regard to trans-Tasman financial stability when implementing policy.

"The legislative changes represent a pioneering step in cross-border banking supervision. They draw a realistic balance between the desirability of trans-Tasman cooperation and the necessary independence of each prudential regulator within their national boundaries."

To view the Reserve Bank of New Zealand's Financial Stability Report please follow this link: www.rbnz.govt.nz/finstab/fsreport/


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Werewolf: What Does Winston Peters Want His Legacy To Be?

A lot of people in New Zealand seem to resent Winston Peters and the power that he appears to have. “Appears” being the operative word. In reality, Peters will have power only up to the point that he uses it.

By next week, he’ll have become just another junior player in an MMP governing arrangement, battling to hold onto the gains he was promised. More>>


Rising Toll: Road Safety Needs To Be A Higher Priority

Official advice released to the Green Party under the Official Information Act shows that the previous National Government dismissed an option to make road safety its most important transport priority after being told the road toll was rising. More>>


Wellington.Scoop: Arrests At Blockade Of "Weapons Expo"

“We encourage people in Wellington to get down to the Westpac Stadium now for a day of awesome peace action. There will be plenty of food, music and activities to keep us sustained through the day.” More>>


Rorschach Restructuring: PSA Taking Inland Revenue To Court Over Psychometrics

The Public Service Association will be seeing Inland Revenue in Employment Court over its intention to psychometrically test employees reapplying for their roles at the department as part of its controversial Business Transformation restructuring plan. More>>


Nuclear Disarmament: Nobel Peace Prize 2017 Awarded To ICAN

Congratulations from iCAN Aotearoa New Zealand to international iCAN, the other iCAN national campaigns and partner organisations, and the countless organisations and individuals who have worked so hard for a nuclear weapons-free world since 1945. More>>


Expenses: Waikato DHB CEO Resigns

An independent inquiry has identified that Dr Murray had spent more than the agreed $25K allocated for relocation costs, and other unauthorized expenses involving potential financial breaches of the chief executive’s obligations. More>>


Wellington.Scoop: Sad About The Trolley Buses?

The Regional Council’s MetLink is today spending money to tell us that it really loves Wellington’s trolley buses, even though they’re all being taken off our roads by the end of this month. More>>


Post-Election: Preliminary Coalition Talks Begin

New Zealand First will hold post-election preliminary discussions in Wellington with the National Party tomorrow morning and the Labour Party tomorrow afternoon. More>>




Featured InfoPages

Opening the Election