Innovative ways of risk-sharing in investment projects – for example, governments offering innovative guarantee structures where they take on a contingent fiscal risk as opposed to laying out large expenditures up front – are clearly worth experimenting with. Private sector intermediaries, pension funds, and sovereign wealth funds should be actively encouraged to develop and propose such innovations.
"The Reserve Bank's interest in financial stability and banking regulation is to ensure there is adequate identification, pricing, and allocation of risks to the New Zealand financial system. "Many of the current challenges to New Zealand financial system stability were identified in our November Report, and some have increased. For example, New Zealand banks have continued to raise their exposure to the housing market.