Reserve Bank of New Zealand Bulletin articles
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June 2010 (Vol. 73, no. 2)
Download the complete issue of the June 2010 Bulletin (PDF 4.8MB)
Articles
Editor’s Note (PDF 166KB)
The Reserve Bank and macro-financial stability (111KB)
This article describes the evolving macro-financial stability (MFS) function of the Reserve Bank and discusses the appropriate framework for the function in light of the global financial crisis (GFC). Areas where further analysis and research will be needed are highlighted. The article begins by discussing the evolving international context before explaining the Reserve Bank of New Zealand’s macro-financial stability function. Governance issues are also addressed.
World trade interdependencies: a New Zealand perspective (PDF 4.2MB)
A key determinant of New Zealand’s growth is its trade with the rest of the world. We have developed a world inputoutput table to investigate the way in which New Zealand and Australia depend on the rest of the world, and to look at the role of demand in China, Japan, the US, and the euro area. We show how higher demand in one economy affects production in another economy both directly, through its higher demand for final products, and indirectly, via its higher demand for intermediate products and its impact on production and demand in other economies. We highlight the impact of US demand on other economies and demonstrate the importance of Chinese and Australian demand on New Zealand.
The Reserve Bank’s new approach to holding and managing its foreign reserves (PDF 329KB)
The structure and management of the Reserve Bank’s balance sheet has changed significantly over the last five years. A big area of change has been in the way that foreign reserves are financed. The Reserve Bank no longer finances its foreign reserves on a fully currency-hedged basis, and now predominantly uses the long-term funds on its balance sheet that naturally arise from its core statutory functions to finance foreign reserves more cheaply and more flexibly than was possible in the past. These efficiency gains have been made possible by changing the way we manage our balance sheet from a model where the financial aspects of different business functions were managed separately to a new integrated asset and liability management model. These changes have been designed to improve the Reserve Bank’s ability to meet its policy functions in a more efficient and cost-effective manner. Our experience of the global financial crisis has shown the Reserve Bank’s new balance sheet structure to be effective and resilient at the time when its financial resources have been most in demand.
Financial sector amplification and credit cycles in New Zealand (PDF 239KB)
This article explores some of the channels through which the financial system may amplify business cycles in New Zealand. Such amplification (‘procyclicality’) has been of interest for decades when considering financial booms and crises. There has been particular interest recently in understanding mechanisms through which the financial sector contributed to both the expansion of credit in 2003-07 and the subsequent pressure to reduce leverage during the financial crisis. This article focuses the discussion on New Zealand with emphasis on the credit boom of 2003-07 and the recent fall in credit growth, though the latter has been modest by international standards.
For the Record (PDF 67KB)
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.
