Reserve Bank responds to economic challenges
The Reserve Bank's latest Annual Report (PDF 1.8MB) demonstrates the Bank's commitment to meeting the challenges facing the New Zealand economy and financial system, Governor Graeme Wheeler said today.
Mr Wheeler said that the 2012-13 Annual Report reported a positive outlook for the New Zealand economy, which was currently growing faster than nearly all of the advanced economies, but was being buffeted by a range of domestic and international factors.
"Just as firms and households develop strategies to adjust to the wide range of forces that hit our economy, the Reserve Bank also needs to respond to them in meeting its goals of price stability and financial stability."
Mr Wheeler said the Bank kept its strategies, policies and tools under constant review and, in the last year, it adopted several strategic priorities to enhance the Bank's capacity to handle the current challenging environment.
"These priorities, announced in the Bank's Statement of Intent in June and emphasised in the Annual Report, build on the Bank's achievements in the last year," Mr Wheeler said. "They are designed to continue to strengthen the Bank's performance; develop a more integrated approach to the Bank's monetary and financial stability policies; and improve infrastructure and reduce enterprise risk."
The Annual Report shows that in the financial year 2012-13 the Bank undertook substantial research on the economic and financial environment following the global financial crisis and Canterbury earthquakes. This work had fed into the Bank's regular Monetary Policy Statements, Financial Stability Reports, speeches and research publications.
The Bank signed a Memorandum of Understanding with the Minister of Finance on macro-prudential policy and operating guidelines. Work progressed on the implementation of loan-to-value restrictions – coming into force from 1 October 2013 – to reduce financial stability risks arising from excessive house price and credit growth.
Measures undertaken during the year to reduce risk in the banking system included the implementation of revised capital adequacy requirements for registered banks; and a requirement for large banks to have pre-positioned their systems to enable the operation of the Open Bank Resolution policy.
Financial results show the Bank spent a net $48.3 million on activities covered by its Funding Agreement, and a dividend of $175 million was paid to the Crown.
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