IMF Staff Country Reports

New Zealand: Financial Sector Assessment Program: Financial System Stability Assessment

May 8, 2017

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New Zealand: Financial Sector Assessment Program: Financial System Stability Assessment, (USA: International Monetary Fund, 2017) accessed September 20, 2024

Summary

This paper presents an assessment of the stability of the financial system in New Zealand. Imbalances in the housing market, banks’ concentrated exposures to the dairy sector, and their high reliance on wholesale offshore funding are the key macro-financial vulnerabilities. The banking sector has significant exposure to real estate and agriculture, is relatively dependent on foreign funding, and is dominated by four Australian subsidiaries. A sharp decline in the real estate market, a reversal of the recent recovery in dairy prices, deterioration in global economic conditions, and tightening in financial markets would adversely impact the system. Despite these vulnerabilities, the banking system is resilient to severe shocks. Strengthening the macroprudential framework is important.

Subject: Banking, Commercial banks, Financial institutions, Financial regulation and supervision, Financial Sector Assessment Program, Financial sector policy and analysis, PFM information systems, Public financial management (PFM), Stress testing

Keywords: Australia and New Zealand, Bank, Commercial banks, CR, Financial Sector Assessment Program, Funding shock, Funding shock simulation, Global, Heightened market volatility, Incorporated banks only., ISCR, Market contagion, Market liquidity, Market pressure, MTO market, New Zealand property, NZ clear, OBR Pre, OBR Pre-positioning requirements policy, Parent bank, PFM information systems, Public funds, RBNZ liquidity policy, Return on equity, Stress testing

Publication Details

  • Pages:

    92

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Country Report No. 2017/110

  • Stock No:

    1NZLEA2017001

  • ISBN:

    9781475598834

  • ISSN:

    1934-7685