At some point in the future the “special” status of banks in the New Zealand supervisory approach may need to be reassessed. This might be prompted by the continued gradual breaking down of the traditional distinction between banks and non-banks in financial intermediation, or perhaps by banking services being provided in New Zealand by institutions not physically located here.
It may also be prompted by a risk-proofing of payments and settlements systems that effectively prevents the problems of one bank contagiously spreading to others. Concerns about financial system stability might ultimately be best addressed by designing a supervisory framework that is focused on those systems themselves rather than on the main institutions.