June 2010 Bulletin released

Release date
30 June 2010

The Reserve Bank today released the June 2010 issue of the Reserve Bank of New Zealand Bulletin.

Internationally, attention is turning towards new macro-prudential instruments that might enhance the stability of the financial system. The lead article, by Deputy Governor Grant Spencer, places the Reserve Bank's macro-financial stability function within the international context and reviews the appropriate policy framework in light of the global financial crisis.

The recent international financial crisis has illustrated a variety of mechanisms through which financial markets and institutions can amplify business cycles, with potentially severe impacts on the real economy. The second article considers how the financial sector may contribute to credit booms and, in turn, business cycles in New Zealand.

The third article examines global trade linkages and how these trade linkages matter for New Zealand. The authors find that New Zealand is dependent on Australia and the broad emerging-Asia region. In turn, many countries are heavily influenced by output in the US and Euro area and more so than might be thought by a simple examination of bilateral trade data.

The final article outlines the nature and rationale for the significant changes in the structure and management of the Reserve Bank's balance sheet that have occurred over the past five years. The Bank's experience during the global financial crisis suggests the changes to the management of the Bank's balance sheet have been effective in supporting the Bank's functions at a time of system stress.

Media contact:
Anthea Black
External Communications Adviser
Ph 04 471 3767, 021 2225225,
anthea.black@rbnz.govt.nz