Reserve Bank's SOI shows focus on stability

The Reserve Bank’s Statement of Intent (SOI) for 2011-2014, released today, demonstrates the Bank’s focus on maintaining stability despite shocks from devastating earthquakes and continuing world financial and economic uncertainties (http://www.rbnz.govt.nz/about/whatwedo/1764296.html).

“The effects of the Canterbury earthquakes are complex and significant,” Reserve Bank Governor Alan Bollard said. “At the same time, internationally, much of the world is still in recovery from the Global Financial Crisis, with continued uncertainty in some financial markets. On the economic front, rising commodity prices are improving export incomes, but putting pressure on the exchange rate.”

Dr Bollard said that the strategic priorities the Bank has adopted for the next year focus on work contributing to economic and financial recovery and stability.

“Our work programme includes assessing the impact of the Canterbury earthquakes and their implications for the Bank’s monetary policy.

“We will also be developing an implementation framework for macro-prudential policy tools in New Zealand which takes into account the inter-relationships with monetary policy.”

In terms of promoting a more stable financial system, the Bank will develop a plan for implementing the Basel III prudential requirements for banks, suitably adapted for New Zealand conditions.

“We will also seek to have insurers on the path to obtaining full licences by September 2013, meeting at least the provisional licensing requirements by March 2012.”

The Bank also intends to undertake initial planning for a new issue of bank notes.