Its effects – in terms of lost output and unemployment – would persist, likely for a decade or more. This means focusing not just on risks to our financial system but on the market failures that can exacerbate these risks and undermine financial stability.
The Reserve Bank’s approach to maintaining and promoting financial stability in New Zealand is expanding and becoming more intensive, in terms of both regulation and supervision. We are recalibrating the rules and our enforcement of them. This is in response to our own experience and a publicly perceived need for us to do more, and better.