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Statement of Intent 1 July 2020 - 30 June 2023

Reserve Bank of New Zealand

Foreword from the Governor and Deputy Governor

Te Pūtea Matua, the Reserve Bank of New Zealand, acts to promote the prosperity and well-being 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.

The challenges we face range across financial, operational, legal, and reputational issues. Our integrity is critical to our success, and we maintain this integrity by operating transparently – being open to learning and adapting as necessary. Change is ever present, including in economic conditions, technology, societal expectations, and the effectiveness of our tools and practices.

A current, severe, example of change and necessary adaptation that has been forced upon the global economy is the outbreak of the COVID-19 pandemic. The global economy, including New Zealand’s, has been seriously affected by the pandemic, necessitating us to take urgent – and unprecedented – action to maintain monetary and financial stability, and offer broader support to the Government, financial institutions, and the people of New Zealand.

Our COVID-19 response to date has included a significant easing in monetary conditions and the introduction of large scale asset purchases, the provision of plentiful and cheap liquidity for the banking system, supporting the functioning of New Zealand’s debt markets, ensuring accessibility of cash, and facilitating a variety of Government-led initiatives.

The global economic disruption is expected to persist and lead to lower economic growth, employment, and inflation well into 2021 at the least. The Reserve Bank, and our financial system and institutions, are well positioned to both weather this economic storm and support and prosper in the inevitable recovery. We are made more confident of this support because the banking system was required, by us, to hold more capital, liquidity, and lower risk mortgage loans during the ‘good times’ of recent years. Banks can now be part of the economic recovery.

We intend to continue to build our capability and capacity at the Reserve Bank over coming years, as outlined in this Statement of Intent.

We remain committed to our Te Ao Māori strategy to ensure a higher degree of cultural awareness internally and externally, and to build a more diverse and inclusive team. We worked with northern hapū, Te Roroa, and told the story of Te Pūtea Matua using the Māori legend of Tāne Mahuta. This Statement of Intent builds on this story.

Our new 5-year Funding Agreement with the Minister of Finance enables us to invest in the capability and capacity of our team, and ensure our systems are robust and effective so as to support our vision of being a Great Team and the Best Central Bank.

We will invest in supervision and enforcement expertise and intensity to best meet our mandate for prudential regulation, protecting and promoting the stability of New Zealand’s financial system. This investment will include a significant presence in Auckland where many financial institutions are now headquartered.

We will work in close collaboration with industry, Government, and our co-regulators in the best interest of all New Zealanders. A key area we are advancing is the effectiveness of the Council of Financial Regulators – a cross-agency forum focusing on the longer-term priorities for our financial system. Our joint efforts are already paying off as we work collectively with Government and industry in the response to the COVID-19 economic challenges. A longer-term, yet equally critical, risk is that posed by climate change. Collectively we will work to assist the transition of the New Zealand economy to a low carbon future.

We will continue to collaborate closely with our international colleagues, ensuring that we are operating at best practice levels and benchmarked accordingly. Special attention will remain on working in our region of the world with both Australia and our South Pacific neighbours. Information sharing on supervision and money flows is critical to the reputation and financial soundness of our region, and our peoples’ wellbeing.

Please enjoy the read and do note our commitments in this Statement of Intent. We will hold ourselves accountable to achieving the stated goals, and expect you all to hold us accountable also. We are New Zealand’s central bank for the people of New Zealand – current and future.