Policy coordination does not mean, of course, a unique policy stance for the entire world. Coordinated policy action is not a surrogate for domestic macroeconomic prudence. We are all convinced that monetary policies geared towards domestic price stability, sound public finances and flexible economic structures create the conditions for an international financial architecture that can last.
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?