In New Zealand, we have also been keenly aware of the liquidity risks that recent events have demonstrated. Banks have had an important role intermediating capital account flows into New Zealand (and Australia), and have accepted a significant amount of short term capital flows in order to minimise funding costs.
We want to look at whether the vulnerabilities that this can create have been adequately priced and managed – noting that some of the costs of a liquidity event are probably externalities that would ultimately be borne by other New Zealand parties.