Income is assured through the authority to invest proceeds from the sale of currency and bank capital, and may be earned (or lost) through trading or investment in debt securities, money market instruments, derivatives, and foreign exchange. New Zealand has a floating exchange rate, and prescribed limits on foreign reserve holdings contain the Crown’s risk exposure.
Let me note that raising growth potential is a time-consuming task. Therefore, while the Bank’s conduct of monetary policy stimulates aggregate demand and suitably tight supply-demand conditions are being maintained, a virtuous cycle in which active demand encourages progress in various initiatives should remain intact for a long period of time.