The LVRs have reduced housingrelated risk in the banking system and also helped to ease housing market pressures. The policy has been particularly useful in the current environment of globally low interest rates, where domestic monetary policy has been unable to counter the strong housing cycle of recent years. But do we have the most appropriate macro-prudential framework for our circumstances in New Zealand?
What role could the other instruments in our toolkit play to enhance and/or complement the LVRs? Should we be considering other macro-prudential instruments? Is the governance structure sensible? There are diverse views on these questions.