Towards a framework for promoting financial stability in New Zealand
Central banks, like the Reserve Bank of New Zealand, make judgements and take actions to promote the stability of the financial system. This involves making decisions in inherently uncertain situations. For example, how is financial stability defined? How can we recognise an imminent financial crisis? And, how is a financial crisis best mitigated or recovered from? This article presents a step towards a broad conceptual framework for promoting financial system stability and guiding the Bank's policy actions. We argue that the preconditions for financial stability are met when all financial system risks are being adequately identified, allocated, priced and managed. The financial system is made up of markets, institutions, and payments and settlement systems. Financial system risks broadly include credit, liquidity, market and operational risks. All of the preconditions are important to best ensuring that the financial system is resilient to a wide range of economic and financial shocks, and able to absorb financial crisis losses with least disruption. The preconditions for financial stability also best ensure that the financial system is efficient in its delivery of financial services, and allocating resources throughout the economy. In making assessments of financial stability, the Reserve Bank does not have a single, well-defined quantitative measure. Instead we draw on a variety of information, practices, and ongoing research. The Bank conducts regular surveillance of financial risks and reports on its assessments in the twice-yearly Financial Stability Report.
Volume (Year): 69 (2006)
Issue (Month): (March)
|Contact details of provider:|| Postal: P.O. Box 2498, Wellington|
Phone: 64 4 471-3767
Fax: 64 4 471-2270
Web page: http://www.rbnz.govt.nz
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Claudio Borio & William R. White, 2003.
"Whither monetary and financial stability : the implications of evolving policy regimes,"
Proceedings - Economic Policy Symposium - Jackson Hole,
Federal Reserve Bank of Kansas City, pages 131-211.
- William R. White & Claudio E. V. Borio, 2004. "Whither monetary and financial stability? the implications of evolving policy regimes," BIS Working Papers 147, Bank for International Settlements.
- anonymous, 2004. "Asset prices and monetary policy," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 67, march.
When requesting a correction, please mention this item's handle: RePEc:nzb:nzbbul:march2006:2. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Reserve Bank of New Zealand Knowledge Centre)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.