In doing so, New Zealand’s financial system will be more dynamic and sound, potentially raising our sustainable economic growth performance. This paper outlines the important influence the financial system has on economic growth, highlights some of the unique features of our system, and discusses how the potential gaps and vulnerabilities in New Zealand’s financial system could be addressed (including actions the Bank is undertaking).
The important role of the financial system It is well known that New Zealand is, and has been for a long time, dependent on foreign savings for its investment capital. New Zealand finances around a third of its national investment spending through domestic savings, with the remaining two thirds financed from abroad.