December 2008 Reserve Bank Bulletin

The Reserve Bank today released the December 2008 issue of the Reserve Bank of New Zealand Bulletin.

This edition of the Bulletin is built around the theme of liquidity and
New Zealand's financial markets.
The first article discusses the evolution of the Reserve Bank's
liquidity management arrangements over the past few years. This
evolution includes the measures introduced this year as the global
financial system turmoil deepened. The arrangements are now more robust
and adaptable to a variety of stresses, including those the economy
currently faces.

The second article explores how instability in the international
financial system spread far beyond its original source in the US
subprime mortgage market, including to New Zealand. The article
discusses the key role of New Zealand's debt to offshore investors - a
substantial part of which is due to local banks raising funds offshore
for lending in New Zealand.

The existence of settlement risk is one reason why banks need to ensure
they have adequate liquidity resources at all times. The third article
looks at settlement risk in the retail payment system and how the
Reserve Bank is addressing it through its payment system oversight
activities.

The fourth article explains the new regulatory framework for non-bank
deposit takers.

Finally, the edition includes the results of the Reserve Bank's 2008
survey of Bulletin readers.

You can read the Bulletin at the following link:
http://www.rbnz.govt.nz/research/bulletin/index.html