While the banks’ funding shortfall was met through parent funding and the Reserve Bank’s expanded liquidity facilities, the experience underlined the need for banks to lengthen the maturity of their liabilities relative to assets, in order to reduce their vulnerability to such shocks. To address these issues, the Reserve Bank introduced a new prudential liquidity policy for banks in April 2010.
It was difficult for a while to discern the trend in consumption behaviour because of shifts in spending patterns caused by the introduction of the GST and the Olympic Games.