2020 Briefing to the Incoming Minister

Governor’s foreword

Te Pūtea Matua, the Reserve Bank of New Zealand, acts to promote the prosperity and wellbeing of New Zealanders.

We do this by promoting a sound and dynamic monetary and financial system, which best supports a sustainable and productive economy. As the current kaitiaki (guardians) of Te Pūtea Matua, we are committed to meeting the challenges and risks that are ever present in the financial system, and making the most of opportunities for the New Zealand economy.

This year, New Zealand faced an unanticipated global health and economic challenge. The COVID-19 pandemic has created new, and accentuated current, challenges. Our response has been significant and at times untested and innovative. These challenges include:

  • Ensuring financial sector resilience and the ability of the banking sector to effectively support economic recovery and focus on customer outcomes. This includes monitoring all parts of financial services delivery, especially where the pandemic has exacerbated economic vulnerability;
  • Developing and deploying alternative monetary policy tools to meet our policy objectives of price stability and maximum sustainable employment. This includes building our own and the sector’s capability as we design these tools, and deploy them to maximise effectiveness and efficacy;
  • Co-ordinating with other regulatory organisations to ensure collaboration, cohesion and sequencing of regulatory improvements across the financial system. This includes being mindful of any unintended regulatory costs and burdens on the financial sector; and
  • Remaining vigilant to our own transformation and managing our programme of Bank-wide transformation and wide-ranging law reform in the current environment.

We are working collaboratively with our Council of Financial Regulators (CoFR) partners to ensure we face these challenges head on and are transparent and accountable for our activities. This allows our stakeholders – the New Zealand public – to have full confidence in our actions.

We are also aware of a number of longer-term challenges and opportunities which will impact our ability to deliver our mandate effectively. These include:

  • Contributing to regulatory settings that support effective labour market adjustment, and foster productivity and innovation in New Zealand. This means ensuring we are maximising efficiencies, promoting private sector involvement, and encouraging both competition and innovation.
  • Maintaining financial sector confidence and certainty. This includes the busy slate of legislative reforms already underway and being clear on what the financial sector needs to respond to. The more certainty we can provide on finishing what we have started, the better prepared our industries will be to implement and benefit from the reforms.
  • Ensuring regulatory stewardship and a co-ordinated and cohesive approach which focuses on the greatest risks and harms to our objectives. This includes continually scanning the financial system for undue regulatory burden, regulatory overlaps or gaps and not creating barriers to competition and innovation.
  • Addressing vulnerability and access to the financial services – research has shown that young workers, ethnic minorities, and people with children are likely to experience greater unemployment than others during recessions. We want to ensure the financial sector and regulators have adapted sufficiently to address the growing divide between those who are included and those who are not.
  • Supporting economic growth that is environmentally sustainable – ensuring we are making the right choices that are long-term, inter-generational, bring us closer to a zerocarbon economy and are in the best interests of future generations of New Zealanders.

Our current strategic objectives set the foundations for a cohesive response to these longer term challenges, but there is more we can do across the system. We welcome the opportunity to discuss these longer term challenges and opportunities.

We aim to be a modern Central Bank and have a vision of being a ‘Great Team, Best Central Bank’. This means we operate transparently; are open to learning and adapting as necessary; work collectively and collaboratively; and are an active, relevant, cornerstone of New Zealand’s economy and society. This applies to our activities, our people, and the way we interact and engage with our stakeholders.

We look forward to continuing to work with you to support us and hold us to account in delivering this vision.