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Annual report 2021

Read our Governor's statement and download a PDF of our annual report for the 12 months ending 30 June 2021.

Reserve Bank of New Zealand

Governor’s statement

Kia orana tātou kātoatoa, tēnā tātou katoa

I am pleased to report that we are meeting our ongoing mandates and growing capability and capacity to respond to new challenges and unexpected events.

We have assisted in delivering:

  • low and stable inflation and maximum sustainable employment;
  • a sound and efficient financial system;
  • robust and fit-for-purpose payment and settlement systems; and
  • money and cash availability for New Zealand’s needs.

Our mandates have been delivered within the context of unanticipated challenges and a rapidly evolving operating environment.

COVID-19 and its economic consequences have required us to act quickly and transparently and have imposed operational restrictions on us and the wider financial ecosystem. We have worked with government and financial institutions to provide temporary financial support, and to co-ordinate monetary and fiscal policy settings to support demand in the economy. The Reserve Bank also responded to a cyber-breach in January 2021 that required significant internal resources and a reprioritisation of our activities.

We used a range of tools to give effect to monetary policy, such as the Large Scale Asset Purchase (LSAP) programme. These were designed to deliver long-term funding at a low interest rate as a means of stimulating the economy. These tools enlarged our balance sheet to $84.1 billion; however, the related risk was offset through the support of high-quality collateral and an indemnity from the Crown.

We continue to learn from these events and respond as required. The responses and lessons over the past year will shape future responses.

We have made continued progress on our transformation as per our five-year funding agreement signed with the Minister of Finance last year. This agreement enables us to invest in people, capability and capacity – including security – so that we can sustain a central bank that is fit for the future.

Although we recorded a $371 million surplus during 2019/20, last year we recommended that no dividend would be paid to the Crown due to the elevated level of uncertainty at that time. As the New Zealand economy has rebounded to a stronger position than anticipated at the outset of the COVID-19 pandemic, we were able to pay a $140 million dividend to the Crown for 2020/21.

Alongside this, we have continued to deliver against ongoing expectations such as:

  • expanding our Auckland presence and developing deeper relationships, including recruiting new staff and an Auckland-based Assistant Governor and expanding our physical presence in our Auckland office. We have engaged with industry and key forums such as the Council of Financial Regulators (CoFR) and facilitated more than 100 speaking engagements in New Zealand and overseas to deepen our connections with stakeholders
  • having regard to house price sustainability in our decision-making under our financial stability mandate and through our decision-making committees e.g. the Monetary Policy Committee (MPC) and the Financial Stability Committee. We have commenced a work programme focused on assessing house price sustainability in New Zealand, including defining the concept of house price
  • sustainability, and establishing a framework and a suite of metrics to support the assessment of whether New Zealand house prices are sustainable
  • undergoing significant legislative change that will alter how we operate and regulate the financial system in coming years. We continue to prepare for the implementation of the new Reserve Bank of New Zealand Act – the legislation that underpins our purpose and how we operate. The Act is a key part of our transformation and includes a new statutory Governance Board commencing in 2022
    undertaking operational changes to enhance our capabilities, including launching a new Enforcement Department to promote compliance in regulated sectors. We have also refreshed our vision and values and updated our brand to better reflect our purpose and the work we do with our partners on behalf of all New Zealanders
  • responding to societal challenges by launching a work programme to better understand Māori access to capital in the New Zealand economy, taking action to understand and mitigate the risks from climate change to financial stability and making progress on a multi-year project to ensure remittances in the Pacific are accessible, safe and cost effective. We have achieved our target of a 40/40/20 gender balance and appointed our first dedicated Head of Diversity and Inclusion to drive and refresh our Diversity and Inclusion strategy.

I would like to thank our Minister, Hon Grant Robertson, and our Board for their support and guidance during this challenging year.

I would also like to extend my deepest thanks to the people of Te Pūtea Matua – your commitment, effort and determination in supporting all New Zealanders during a difficult year are worthy of an Olympic gold medal.

At Te Pūtea Matua we follow the concept of Matangirua ki Matangireia – working in unison, we fulfil our ultimate purpose. This enables us to achieve our vision of being a Great Team, Best Central Bank and carry out our work with wānanga (innovation), tauira (integrity) and taura (inclusion) in mind.

I invite you to read this Annual Report, hold us to account and share your ideas. Continue to work with us as we enable economic wellbeing and prosperity for all New Zealanders.

Meitaki mā’āta

Noho ora mai

Adrian Orr, Governor
17 September 2021