*  *  *  "In our latest Financial Stability Report (FSR), issued on 19 May, we assess that, over recent months, the New Zealand and global financial systems have continued to perform soundly. However, signs of increased volatility have emerged in some markets (eg, commodities and foreign exchange) and some major challenges to financial stability persist.
"The Reserve Bank's interest in financial stability and banking regulation is to ensure there is adequate identification, pricing, and allocation of risks to the New Zealand financial system. "Many of the current challenges to New Zealand financial system stability were identified in our November Report, and some have increased. For example, New Zealand banks have continued to raise their exposure to the housing market.