The rate paid by the New Zealand Government on its New Zealand dollar 10-year bonds has fallen from around 10 percentage points above that paid by the US Government on 10-year US dollar bonds in the mid 1980s, to little more than half of one percent above the US rate.
The local entities have to be established in the local market, to ensure that, in the event that other group entities fail, they can participate in the market autonomously. However, we at the Bundesbank naturally see the economic advantages of back-to-back hedging. To some extent, transactions such as these serve as a pipeline to international capital resources at other locations.