Even fewer of our banks were caught out by the depreciation, and to the best of my knowledge none incurred losses as a consequence of the move. Because they knew that the New Zealand dollar was freely floating, they were careful to avoid taking on unhedged positions in foreign currency.
Conclusion In conclusion, in a world of open capital markets, the challenges facing banks are very considerable. Central banks can not prevent all banks from getting into trouble, and nor should they try to do so. But central banks do have a responsibility in all our countries to promote the stability of the banking sector.