Reserve Bank of New Zealand Bulletin articles

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September 2009 (Vol 72, no 3)

Download the complete issue of the September 2009 Bulletin (PDF 1MB)

Articles

Quality of bank capital in New Zealand (PDF 170KB)
By Kevin Hoskin and Stuart Irvine

The four largest banks in New Zealand have been accredited to operate as ‘internal models’ (IM) banks under the Basel II capital framework. Under this approach, banks are allowed to use their own models as a basis of determining their minimum capital requirements, subject to their models being accredited by the Reserve Bank. In this article, we explore the quality of capital in New Zealand. We explain the Reserve Bank’s capital philosophy, and discuss the key issues that have been considered during the implementation of the IM approach within the New Zealand context. In doing so, we highlight areas in which the Reserve Bank has diverged from international practice to ensure that the New Zealand banking system operates within a conservatively capitalised framework, commensurate with the risks faced by New Zealand banks.

Anchoring fiscal expectations (PDF 224KB)
By Eric M. Leeper, Indiana University

This paper draws on a lecture on 12 November 2008 in Wellington, when the author was a Professorial Fellow in Monetary and Financial Economics at Victoria University and the Reserve Bank of New Zealand.

Leeper argues that there are remarkable parallels between how monetary and fiscal policies operate on the macro economy and that these parallels are sufficient to lead us to think about transforming fiscal policy and fiscal institutions as many countries have transformed monetary policy and monetary institutions. Making fiscal transparency comparable to monetary transparency requires fiscal authorities to discuss future possible fiscal policies explicitly. Enhanced fiscal transparency can help anchor expectations of fiscal policy and make fiscal actions more predictable and effective. As advanced economies move into a prolonged period of heightened fiscal activity, anchoring fiscal expectations will become an increasingly important aspect of macroeconomic policy.

‘Mordacious years’: socio-economic aspects and outcomes of New Zealand’s experience in the Great Depression (PDF407KB) and High Resolution (PDF3MB)
By Matthew Wright

Some commentators in New Zealand and elsewhere have proposed similarities between the Great Depression of the early 1930s and the recession that began in 2007-08. To illuminate that discussion, this article provides brief international context before narrating selected economic data and socio-economic aspects of New Zealand’s 1930s experience during the Great Depression, arguing that the popular perception of New Zealand’s economic experience was moulded more by perceived social impact than the empirical economic data.

The financial crisis: whodunnit? (PDF72KB)
By Howard Davies

Howard Davies is Director of the London School of Economics. This is the text of a speech he delivered on 30 July 2009,when he visited the Reserve Bank on the occasion of our 75th anniversary. View the slideshow accompanying the speech and a video file of the speech.

Financial crises, sound policies and sound institutions (PDF94KB)
an interview with Michael Bordo, conducted by John Singleton, Victoria University of Wellington

Professor Michael D. Bordo is a Professor of Economics and Director of the Center for Monetary and Financial History at Rutgers University in New Brunswick, New Jersey. He visited New Zealand in June and July 2009 as part of the Professorial Fellowship in Monetary and Financial Economics sponsored by the Reserve Bank of New Zealand and Victoria University of Wellington. Michael is a Research Associate of the National Bureau of Economic Research in the United States, and has spent time as a Visiting Scholar, Professor or Consultant at the IMF, the World Bank, and many central banks. In this interview, Michael talks to John Singleton about his research interests in monetary and financial history and financial crises, the determinants of New Zealand’s financial vulnerability, and some of the issues facing central banks in dealing with the aftermath of the current global financial crisis.

Economic recovery (PDF124KB)
By Alan Bollard

This article reproduces the paper for a speech given by Governor Alan Bollard on 14 July 2009 to the Hawke’s Bay Chamber of Commerce, Napier, New Zealand. It argues that certain basic factors will promote sustainable growth and reduce the New Zealand economy’s vulnerability in the recovery phase following the global economic crisis of 2008-09.

These factors are greater savings by households, to reduce the need for foreign funding of the economy; investment in the economy’s productive base, particularly in the tradable sector; and greater durability and depth in funding markets, including a lengthened maturity structure for bank funding. The speech also looks at the major drivers of the crisis and world recovery, and the impact of the crisis on New Zealand.

Alternatively, link to the html version of this speech by Alan Bollard.

For the record (PDF 96KB)
Recent discussion papers, news releases and publications from the Reserve Bank of New Zealand

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.