One particular consequence is seen in our current account deficit, a measure of the external financing required by the country’s investment-savings imbalance. In recent years about half the deficit has been represented by the trade imbalance. The other half has mainly been the imbalance of income earned by foreigners in New Zealand compared with that earned by New Zealanders abroad.
At the Federal Reserve, we are studying different approaches and have a project underway to develop guidance on how to address this risk. In the near future, we plan to compare our observations on best practices on internal controls and operational risk management practices with yours to develop some useful resource materials for good corporate governance at community banks.