In addition, financial firms that had assumed that their holdings of GSE debt were as good as cash were forced to reassess the adequacy of their liquidity positions, adding to balance sheet pressures and leading to even greater safehaven demands for Treasury securities.
There are real operational, legal, financial, and reputational risks to the Bank, and New Zealand’s financial landscape, if we don’t make the appropriate investments in a timely manner. The direct and opportunity costs of falling behind on investment are significant – witness the cost of bank failures, and financial volatility and uncertainty, in recent history and ongoing today in some countries.