New Zealand Financial System Coping Well

Global economic and financial conditions continue to pose risks for New Zealand’s financial system, Reserve Bank Governor Alan Bollard said when releasing the May 2012 Financial Stability Report.

“Financial market sentiment has improved since the start of 2012, largely reflecting policy measures in Europe. However, the situation remains fragile given limited progress in addressing Europe’s underlying issues.

“In New Zealand, households remain cautious and have been saving more while business investment has been weak. Private sector indebtedness has declined, although this has largely been offset by rising public debt.

Deputy Governor Grant Spencer said the soundness of the NZ banking system continues to improve despite considerable international volatility, while credit demand is weak.

A strong inflow of retail deposits has enabled banks to lift their domestic funding shares and minimise offshore funding use.

All banks are now meeting the Reserve Bank’s Core Funding Ratio by a comfortable margin and we have confirmed our intention to lift the ratio from 70 percent to 75 percent in January next year.

RBNZ: Sonia Speedy, External Communications Adviser
Please see the full Financial Stability Report May 2012 for full details.

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