Academic journal article The Reserve Bank of New Zealand Bulletin

Financial System Coping Well with International Stresses

Academic journal article The Reserve Bank of New Zealand Bulletin

Financial System Coping Well with International Stresses

Article excerpt

9 May 2012

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

"Financial market sentiment has improved since the start of 2012, largely reflecting policy measures in Europe which have helped to mitigate the effects of softening economic growth, stretched sovereign debt positions and weak bank balance sheets. 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.

"Growth in most advanced economies remains weak and there have been recent signs of slowing in Australia and China. Commodity prices have eased in recent months which could create financial pressures for some primary exporters if sustained."

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

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