Reserve Bank Bulletin Released

The Reserve Bank today released the June 2011 issue of the Reserve Bank of New Zealand Bulletin (http://www.rbnz.govt.nz/research/bulletin/).

This edition centres on the Bank’s financial stability and financial markets responsibilities, looking firstly at rural lending. The last few years have highlighted to borrowers and lenders alike that rural lending can be risky and this article provides background on the Reserve Bank’s new minimum requirements and looks at how they might affect rural lending margins.

Sitting alongside this is an article detailing the results of a “stress” test carried out by the Reserve Bank to better understand how severe shocks in the dairy industry might impact banks.

The June Bulletin’s third article focuses on financial system efficiency. This piece reports on the Bank’s analysis and policy development in financial system efficiency. It includes preliminary findings on rates of return in banking, based on cross-country results.

The final article looks back to the international financial crisis and the extraordinary measures the Reserve Bank took at that time to manage domestic liquidity conditions and to avoid the risk of a more serious domestic credit crunch. This includes formal statistical tests on the announcement effects of the various measures employed.

The article suggests that the supportive actions undertaken by the Reserve Bank played a significant role in maintaining the functioning of the New Zealand money market and the flow of domestic credit during the financial crisis.