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?
A decade ago, no-one would have predicted that Japan, an economy which recorded extraordinary growth for a generation, would struggle to grow by an average of 1½ per cent per year during the 1990s.