Large customers of the banks have corporate treasuries which manage their transactions and exposures in several currencies, matching exposures by currency so as to minimise net exposure in foreign exchange, and reduce the transactions costs of currency conversion. We have looked into this phenomenon at this conference in years past, and when we meet with banks we invariably discuss how the market is evolving.
We have stressed in our submissions to the Basel Committee that assessing compliance with any international standard needs to be focussed on looking at whether the substance, rather than the form, of the standard is being met. I should add that, notwithstanding these concerns, New Zealand strongly supports the introduction of international standards.