Reserve Bank of New Zealand Bulletin articles

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September 2003 (Vol 66, no 3)

Download the complete issue of the September 2003 bulletin (PDF 360KB)

Articles

Editor's Note (PDF 17KB)

Recent developments in New Zealand's financial stability (PDF 120KB)

By Michael Gordon, Leslie Hull, and Clive Thorp
This article assesses the current state of, and threats to, financial stability in New Zealand. It does this against a backdrop of continued softness in global growth and in corporate credit quality abroad. It concludes that New Zealand's financial sector has remained resilient despite continued global economic weakness, and there do not appear to be any immediate concerns for financial stability locally. Banks are well capitalised, with sound asset quality and strong parent banks, and corporate credit quality remains satisfactory. New Zealand household leverage is high by the standards of many countries, though not by comparison with some of the more advanced economies of the OECD. While household gearing and debt servicing payments have remained stable, highly indebted households are vulnerable to interest rate volatility.

Neutral real interest rates revisited (PDF 76KB)

By Nils Björksten and Özer Karagedikli
Monetary policy decision-making commonly involves setting interest rates to stimulate the economy and prevent deflationary forces gathering momentum, or to constrain the economy and prevent inflationary forces gathering momentum. In setting interest rates, therefore, one needs to know what level of interest rates will stimulate and what level will constrain economic activity. Whereabouts is the dividing line? This is the question that we address in this article. It turns out that it is very difficult to come up with a precise answer, as a range of different analytical approaches provides a range of answers.
In the process of trying to identify the "neutral" interest rate that is the dividing line between stimulatory and contractionary, we discuss its evolution through time. We also note that, after allowance for inflation, and for a decline in the inflation-adjusted neutral interest rate, the neutral interest rate in New Zealand remains high relative to comparable countries. Although possible reasons for the decline and for the relatively high level in New Zealand are ventured, they are not the prime focus of this article.

Risk management in the Reserve Bank: a 2003 perspective (29KB)

By Steve Anderson
The December 1999 issue of the Bulletin contained an article describing the then newly formed Risk Assessment and Assurance Department in the Reserve Bank and explaining how the Bank managed its risks. This article provides a 2003 perspective on these issues.

International efforts to combat the financing of terrorism (40KB)

By Ken Matthews
Following the terrorist attacks in September 2001, there have been a number of developments in measures to combat the financing of terrorism. This article discusses the characteristics of terrorist financing and summarises the international initiatives to counter the financing of terrorist activities, including measures taken by the United Nations, Financial Action Task Force, regional bodies and national authorities, including New Zealand.

Monetary policy and the volatility of real exchange rates in New Zealand (22KB)

By David Hargreaves
This article is a brief summary of a lecture delivered on 19 June at Victoria University in Wellington by Professor Ken West. Professor West was a visiting professor under the Professional Fellowship programme sponsored by the Reserve Bank.

Has the rate of economic growth changed? Evidence and lessons for monetary policy (18KB)

By Christopher Plantier
This article is a brief summary of a lecture given by Professor Shapiro on 8 April 2003 at Victoria University in Wellington. Professor Shapiro was a visiting professor under the Professorial Fellowship programme sponsored by the Reserve Bank

Summary of a new Reserve Bank of New Zealand paper: Overview of New Zealand financial sector regulation (10KB)

By Geof Mortlock
In the March 2003 issue of the Bulletin, we ran an article explaining the Financial Sector Assessment Programme (FSAP) and noted that New Zealand will be undergoing an FSAP assessment later this year. The FSAP assessment will take place in October and November this year and will involve a team of foreign officials, led by the International Monetary Fund, assessing various aspects of New Zealand's financial system. This will include an evaluation of much of the financial sector regulatory framework, particularly banking supervision and securities market regulation.

Speeches

Financial system regulation in New Zealand: paper presented during a speech to the Finance Sector Ombudsman Conference (36KB)

Alternatively link to an html version of this paper by Dr Alan Bollard and Tim Ng

Extract from an address to the Property Council of New Zealand (42KB)

Alternatively link to an html version of this address by Dr Alan Bollard

The views expressed are those of individual authors and do not necessarily reflect official positions of the Reserve Bank of New Zealand. Articles published in this Bulletin may not be wholly or substantially reproduced without the permission of the Reserve Bank of New Zealand. Data, brief extracts from articles, and other material appearing in the Bulletin, may be used without restriction provided due acknowledgement is made of the source.