Professor George Kaufman, the John F Smith Professor of Finance and Economics at Loyola University in Chicago, spent time at the Reserve Bank of New Zealand earlier this year while a Professorial Fellow in Monetary and Financial Economics at Victoria University of Wellington, funded by the Reserve Bank under its visiting academic sponsorship programme. While at the Reserve Bank, Professor Kaufman worked on a range of issues relating to financial stability, focusing in particular on options for dealing with bank distress and failure situations. In that context, the Editor of the Bulletin interviewed Professor Kaufman on a range of financial stability issues. This interview represents an edited version of the interview held with Professor Kaufman and has been approved by him for publication in the Bulletin. The views expressed in this interview are those of Professor Kaufman and do not necessarily represent the views of the Reserve Bank.