Reflecting the risks inherent in the New Zealand financial system and the Reserve Bank’s regulatory approach, New Zealand bank capital requirements should be conservative relative to international peers As discussed, New Zealand’s economy and financial system have risk characteristics that set us apart, including: our exposure to export markets; our dependence on international capital markets; our high degree of banking industry concentration; and the low diversification in banks’ lending portfolios.
Initially, inclusive of the Lehman shock and the subsequent earthquake disaster, the policy stance was geared toward mitigating repeated downward pressure on economic activity and underpinning the economy. Afterwards, Japan’s economy gradually escaped from such shocks and reached a situation in which an outlook of returning to the sustainable growth path with price stability can be shown.