It is implausible to believe that New Zealand will never again face the prospect of a major bank in distress. Our banking system is presently one of the soundest in the world. On the basis of the weighted average credit rating of the banks operating in New Zealand today, Moody's Investor Services rates New Zealand as the third soundest banking system in the world.
We also have one of the highest levels of foreign ownership and, among privately owned systems, one of the most concentrated. By their nature, banks are exposed to risks which they seek to manage. It is by absorbing and managing those risks that banks contribute to our economic growth and prosperity. They transform short-term liquid deposits into long term, difficult to monitor assets.