The serious mismanagement of an Australian bank, or a major shock to the Australian economy, could have serious negative repercussions for the New Zealand banking sector and financial system.
It is awareness of these potential vulnerabilities that motivates the RBNZ's vigilance, and that has led to a particular focus over the last couple of years in assessing and reinvigorating how we go about regulating and supervising banks, as well as driving trans-Tasman policy harmonisation. The RBNZ's responsibility to supervise banks in New Zealand is prescribed in the Reserve Bank of New Zealand Act.