Academic journal article The Reserve Bank of New Zealand Bulletin

Editor's Note

Academic journal article The Reserve Bank of New Zealand Bulletin

Editor's Note

Article excerpt

Maintaining financial system stability is a key responsibility of modern central banks and is an issue that has received considerable attention from policymakers and academics in recent years. Many countries have experienced episodes of financial instability in one form or another, and the damaging effects of that instability--and the need to avoid it in future--are well recognised. But what constitutes financial stability and how do we measure whether or not a financial system is essentially stable?

In the first article of this issue, Leni Hunter, Adrian Orr and Bruce White of the Bank's Financial Stability Department set out a conceptual framework describing the preconditions for financial stability. Needless to say, the article is not intended to be the last word on the subject, but should be seen as an important step in setting out the guiding principles behind the Bank's financial stability role. The Bank regularly reports on its assessment of the financial system in its twice yearly Financial Stability Report and we will continue to publish Bulletin articles on topics related to financial stability in the future.

The second article, written by me, considers how the inflation process in New Zealand has changed over the past two decades or so. The article is a revised version of a paper originally written for a Bank of International Settlements seminar. …

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