Reserve Bank focused on stability

Release date
29 June 2009

The Reserve Bank's focus for the year ahead remains on the stability of the financial system and economy in the face of an uncertain global environment, Acting Governor Grant Spencer said today, releasing the Bank's Statement of Intent (SOI) for 2009-2011 (PDF 154KB).

The SOI is an annual document outlining the Bank's plans for the three years ahead, and its budget for the year ahead.

"The New Zealand economy has been under pressure from the international financial crisis, global recession and weak domestic spending," Mr Spencer said. "In this volatile climate, our strategic priorities, as set out in the SOI, are to ensure outcomes that we would take for granted in normal times: that our financial markets and institutions continue to operate effectively and continue to support the financing needs of the real economy.

"Inflation is less of a concern just now, but may present an important challenge once confidence returns to global markets, given the large amount of liquidity that has been injected into the global system."

The SOI describes the Bank's ongoing work program to develop and implement the new regulatory framework for non-bank deposit takers and insurance companies. Other Bank priorities include upgrading statistical data collection systems, and establishing a small Auckland office to provide backup for essential payments and market operations in the event of a physical disaster in Wellington.

The Bank's budget for 2009–10 shows an increase in operating expenditure from $52.1 million to $55.1 million, mainly reflecting the expansion of regulatory responsibilities for non-bank financial institutions, the costs of establishing the Auckland office, and depreciation costs for new systems.

"As a financial institution with approximately $29 billion in assets, the Bank faces a wide range of financial risks which are carefully managed. However, the global financial crisis, together with the Bank's policy responses, have given rise to increased volatility in the Bank's balance sheet and income." Mr Spencer said.

Key performance indicators for the Bank are included in the SOI, covering the key functions of monetary policy formulation, financial system surveillance and policy, currency, and depository and settlement services.

Media contact:
Mike Hannah,
Head of Communications,
Ph 04 4713671, 021 497418,
mike.hannah@rbnz.govt.nz