While New Zealand’s history with bank failures is limited, we all know that the past is not necessarily a good predictor of the future – so we must view bank failures in New Zealand as a real possibility and ensure that banks in New Zealand are resilient enough to withstand severe losses.
Indeed, recent advances in the field of behavioural finance indicate that, excessive complexity may lead to investment decisions being based on a rudimentary information set, not infrequently the last bit of information in the chain.