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Our response to COVID-19

During COVID-19 we introduced a range of initiatives to provide additional monetary stimulus and to support the smooth functioning of New Zealand’s financial markets.

About our response

Our initiatives during COVID-19 enlarged our balance sheet from its December 2019 (pre-COVID-19) level of $24.60 billion to a peak of $104.38 billion at the end of February 2023.

As of July 2023, we're no longer updating this page. 


We bought NZ Government Bonds, Local Government Funding Agency Bonds and NZ Government Inflation-Indexed Bonds, as a part of a Large Scale Asset Purchase (LSAP) programme. We halted additional asset purchases under the LSAP programme on 23 July 2021 as per the decision made by the Monetary Policy Committee on 14 July 2021. The Committee agreed that further asset purchases under the LSAP programme were no longer necessary for monetary policy purposes.

In February 2022 the Monetary Policy Committee agreed to commence the gradual reduction of our bond holdings under the LSAP programme through both bond maturities and managed sales back to New Zealand Debt Management (NZDM). Reducing bond holdings will provide the Committee more scope to use LSAPs in the future and will support the management of liquidity in the financial system. Bonds will be sold at a rate of $5 billion per fiscal year. Local Government Funding Agency Bonds will be held to maturity.

The LSAP programme remains an important tool for supporting the efficient functioning of the New Zealand debt market if required, and remains an important monetary policy tool if needed.

The Crown agreed to indemnify the Bank in respect to financial losses associated with the LSAP programme. Under the letter of indemnity issued by the Minister of Finance, the Crown will reimburse the Bank for any net losses from the LSAP programme and, conversely, any surplus from the programme must be paid to the Crown. If, for example, we have net mark-to-market losses from LSAP bonds, we will have a corresponding receivable from the Crown, which will be accounted for as an asset in our balance sheet. Movements in this balance have no impact on the consolidated Crown balance sheet, as they are claims between the RBNZ and the Crown. We publish the Crown indemnity balance for the LSAP programme in our balance sheet data, released every month. We expect the Crown indemnity balance to fluctuate in line with market movements.

See our balance sheet data

More information

Large Scale Asset Purchases 

Expanded Large Scale Asset Purchases 

Indemnity arrangements with the Minister of Finance 

Halting Large Scale Asset Purchases 

Gradual reduction of the LSAP portfolio 

We introduced a Bond Market Liquidity Support (BMLS) programme to bolster the functioning and liquidity of the NZ Government and LGFA bond markets. The programme complements our activities above by allowing us to purchase bonds at short notice, to improve market liquidity and provide confidence to market participants.

More information on Bond Market Liquidity Support 

As part of our Non-market bonds – Domestic Liquidity portfolio, we hold a proportion of every Government Bond on issue to use in our Open Market Operations and Bond Lending Facility. This is part of our normal operations and differs from temporary asset purchase facilities such as LSAP and BMLS.

We ensured banks could access enough cash to keep lending at low interest rates

In December 2020, we introduced a new longer-term funding scheme for banks called the Funding for Lending Programme (FLP). FLP aimed to lower the cost of borrowing for businesses and households, thereby supporting economic activity.  Access to the FLP closed on 6 December 2022.

About the Funding for Lending Programme 

We pre-emptively reinstated our Term Auction Facility (TAF) in March 2020, which was last used during the Global Financial Crisis as a way to alleviate pressures in funding markets and to provide banks with an alternative source of short-term funding (up to 1 year term).

The final tenders for TAF were held on 16 March 2021, as financial market and liquidity conditions had improved significantly since March 2020 and the demand for special facilities had fallen.

More information on the Term Auction Facility 

In May 2020, we introduced a longer-term funding scheme for banks called the Term Lending Facility (TLF) in support of the Government’s Business Finance Guarantee Scheme (BFGS). The purpose is to allow banks to access low-cost funding so they can lend to businesses at low interest rates.

The Government closed the BFGS on 30 June 2021 and the TLF was subsequently closed following the completion of the final scheduled facility window on 28 July 2021.

More information on the Term Lending Facility

More information on the ending of the Term Lending Facility

We increased the Crown overdraft facility to assist with the potential for larger-than-usual fluctuations in Crown cash flows

We provide a Crown overdraft facility to help the Government manage short-term fluctuations in its cash flows. We temporarily increased the overdraft from $5bn to $10bn for a three month period to 1 July 2020, to assist with the potential for some larger-than-usual changes in cash flows. The overdraft facility was utilised for a short period coinciding with the Government’s April 2020 bond maturity, and the account was replenished following the issuance of additional bonds and Treasury bills.

We manage the amount of cash in the banking system to ensure that payments can be settled and interest rates remain near the OCR

We initially injected large amounts of NZ dollars (in exchange for other assets) to meet increased demand for cash in the banking system. Our NZ dollar lending through the foreign exchange (FX) swap market saw our foreign currency assets increase from $7.30bn in December 2019 to $18.67bn during March 2020, but this reduced as increased cash level in the banking system reduced the need for FX swap activity.

More information on our liquidity management and monetary policy implementation 

We hold foreign currency reserves to provide us with the capability to affect the NZ dollar exchange rate

We are responsible for managing dysfunction in the foreign exchange market and in the financial system. We can also, in some circumstances, use foreign exchange intervention as a monetary policy tool when there is significant divergence in the New Zealand dollar from its fair value. These responsibilities require us to maintain a portfolio of foreign currency reserves. There was no specific need to use the foreign reserves to affect the exchange rate over this period.

More information on foreign reserves


The Standing Repo Facility, originally introduced from July 2022, allows eligible counterparties to lend NZD in the following tenors on a secured basis:

  • overnight
  • tomorrow to the next day
  • tomorrow for 1 week (ordinarily 7 days).

The collateral we provide as security for the NZD are nominal NZ Government Bonds (NZGBs) as general collateral.  NZD deposited through the Standing Repo Facility are remunerated at a set spread below the Official Cash Rate (OCR).

More information on the Standing Repurchase (Repo) Facility

More information on announced changes to Standing Repurchase Facility

We provide the Government with an account that it uses to deposit surplus funds

If the balance in the Crown Settlement Account (CSA) is positive, our balance sheet shows a liability. If the Government is overdrawn, the overdraft is an asset on the balance sheet (see overdraft facility above).

We provide banks with accounts to settle inter-bank payments

Banks in New Zealand also hold accounts with us and use these accounts to settle inter-bank payments. These accounts cannot be overdrawn unlike the CSA.

We influence the total size of banks’ settlement account balances when we conduct our operations. For example, when we purchase bonds from banks through our Large Scale Asset Purchases, banks deposit the cash proceeds back into their settlement accounts at the Reserve Bank. As we purchase more bonds, this results in an increase in the amount of assets on our balance sheet, but also increases the amount of liabilities (deposits) that banks leave with us (as we have replaced their bond holdings with cash).

We supply New Zealand dollar notes and coins

We are the sole supplier of NZ dollar banknotes and coins. Currency is a liability on our balance sheet because banks that deal directly with us to buy physical currency can return it to us in exchange for a deposit in their account at the Reserve Bank. Our currency liabilities initially increased by $0.8bn from $7.2bn in February 2020 as banks filled ATMs in preparation for potential disruptions to supply chains ahead of the COVID-19 lockdown.

More information on banknotes and coins 

Equity acts as a buffer against potential losses from our operations

The difference between our total assets and liabilities makes up our equity on the balance sheet. Our equity is held by the Crown and acts as a buffer against the potential for losses arising from our operations. We pay dividends to the Government when our profits cause our equity to rise above what we need to hold in reserve as a buffer.