## 1. Priority Recommendations

## Source details

**Canonical URL:** [1. Priority Recommendations](https://www.imf.org/-/media/files/publications/cr/2019/1nzlea2019001.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/cr/2019/1nzlea2019001.pdf.md)
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---

### Summary of mission outcomes and objectives
- Mission: monetary and financial statistics (MFS) technical assistance (TA) mission visited Wellington, New Zealand during October 1–12, 2018.
- Main objectives:
  - complete the central bank Standardized Report Form (SRF 1SR);
  - review the source data and bridge table used to produce Other Depository Corporations (ODCs) Standardized Report Form (SRF 2SR);
  - assist the RBNZ to produce additional historical data in the SRFs 1SR and 2SR for the past five years;
  - review the available source data for the compilation the Other Financial Corporations (OFCs) Standardized Report Form (SRF 4SR);
  - prepare metadata for the central bank, ODC, and OFC surveys;
  - agree on a timetable for RBNZ’s SRF-reporting of its MFS.
- Work completed with RBNZ Statistics Unit (SU):
  - reviewed source data for RBNZ, Registered Banks (RBs), managed funds (MFs) and Insurance Corporations (ICs);
  - finalized the SRF compilation framework;
  - developed reports to automatically generate SRFs 1SR, 2SR from Financial Sector Information System (FSIS) by pulling source data from the RBNZ’s general ledger and ODC reporting;
  - identified need to create new series in FSIS to regularly produce and submit data for OFCs (aggregating MFs and ICs).
- Dissemination readiness:
  - RBNZ can now compile MFS based on SRFs for national dissemination and for reporting to the IMF’s Statistics Department (STA) for publication in International Financial Statistics (IFS);
  - Historical monthly series available from:
    - December 2001 for the RBNZ;
    - January 2013 for ODCs;
    - June 2014 for MFs;
    - June 2016 for ICs.
  - Necessary data and metadata to be reported internally and to STA for publication in IFS by end-2018.
- Status: SRF-based MFS are published in IFS as of the December 2018 issue. Many recommended reclassifications were completed on-site within RBNZ’s proprietary database software.

### Priority recommendations (summary with responsibilities and deadlines)
- December 2018 – Completed as of November 2018
  - The RBNZ to report to STA, on a regular monthly basis, SRF 1SR based on the new compilation framework, including historical series from December 2001 onwards.
  - Responsible: RBNZ – Statistics Unit
- December 2018 – Completed as of November 2018
  - The RBNZ to report to STA, on a regular monthly basis, SRF 2SR based on the new compilation framework, including historical series from January 2013 onwards.
  - Responsible: RBNZ – Statistics Unit
- December 2018 – Completed as of November 2018
  - The RBNZ to provide STA with an initial set of quarterly data in SRF 4SR based on the agreed compilation framework, including historical series from June 2014 onwards for MFs and June 2016 onwards for ICs.
  - Responsible: RBNZ – Statistics Unit
- June 2019
  - SU to create the needed time series in FSIS to be able to regularly produce and disseminate data using SRF 4SR for MFs and ICs.
  - Responsible: RBNZ – Statistics Unit
- June 2019
  - SU to align the official monetary statistics published on the RBNZ’s website to the balance sheet and survey data compiled from the SRFs.
  - Responsible: RBNZ – Statistics Unit

### Importance of OFC coverage
- MFs, ICs, and Non-Deposit Taking Finance Companies (NDTFCs) represent around a quarter of total financial system’s assets.
- Excluding these sectors would significantly affect the usefulness of MFS for policy formulation, particularly as these sectors represent long-term household savings.
- Producing OFC data will permit compilation of a financial corporations survey and support compilation of financial statistics such as flow-of-funds and Balance Sheet Approach.

### Follow-up and implementation
- The mission recommended a detailed action plan with the priority recommendations above. Further details are provided in the section Detailed Technical Assessment and Recommendations (in source).
- Attribution: The mission collaborated with staff of the Statistics Unit (SU) of the Macro-Financial Department and thanked the RBNZ and MFD for hospitality and support.

---

### New Zealand financial system structure and key statistics (end-March 2018)

### Aggregate and sector totals
- Total assets of the financial system: about 750 billion NZD, equivalent to around 310 percent of New Zealand’s gross domestic product (GDP).
- Total Assets: 747,481 — 308% of GDP

### Breakdown by institutional sector (NZD billions, end-March 2018; Source: Reserve Bank of New Zealand)
- Central Bank: 29,121 — 4% of total financial sector; 100% of subsector; 12% of GDP
  - RBNZ: 29,121 — 4% 100%
- Other Depository Corporations: 534,511 — 72% of total financial sector; 100% of subsector; 220% of GDP
  - Registered Banks: 527,366 — 71% of total; 99% of subsector; 218% of GDP
  - Nonbank deposit takers: 4,132 — 1% of total; 1% of subsector
  - Cash Management Trusts: 3,013 — 0% of total; 1% of subsector
- Other financial corporations: 183,849 — 25% of total financial sector; 100% of subsector; 76% of GDP
  - KiwiSaver: 48,488 — 6% of total; 26% of subsector; 20% of GDP
  - Other Super: 28,221 — 4% of total; 15% of subsector; 12% of GDP
  - Wholesale: 16,261 — 2% of total; 9% of subsector; 7% of GDP
  - Retail: 38,456 — 5% of total; 21% of subsector; 16% of GDP
  - Other funds and trusts / IMP: 21,876 — 3% of total; 12% of subsector; 9% of GDP
  - Insurance Companies: 20,075 — 3% of total; 11% of subsector; 8% of GDP
  - Nonbank lending institutions (non-deposit taking): 10,472 — 1% of total; 6% of subsector; 4% of GDP

### Institutional roles and legislation
- RBNZ established in 1934; key responsibilities under Reserve Bank of New Zealand Act (1989): formulating and implementing monetary policy, promoting a sound and efficient financial system, banking supervision, and payments and settlement systems.
- Subsequent legislation expanded RBNZ powers:
  - Anti-Money Laundering and Countering Financing of Terrorism Act (2009)
  - Insurance (Prudential Supervision) Act (2010)
  - Non-bank Deposit Takers Act (2013)
- RBNZ acts as a depository agent in relations with the IMF.

---

### ODCs, OFCs, and subsector specifics

### Other Depository Corporations (ODC) sector (end-March 2018)
- Total assets about NZD 535 billion.
- ODC components: Registered Banks (RBs), Savings Institutions (SIs), Deposit Taking Finance Corporations (DTFCs), Cash Management Trusts.
- RBs: 26 operating in New Zealand; six are dual registered banking groups; 15 operate as subsidiaries; 11 operate as branches of overseas incorporated banks.
- Banking sector characteristics:
  - RBs represent over 70 percent of total financial assets;
  - Almost 80 percent of banks’ assets are claims on the domestic private sector;
  - Foreign funding accounts for almost 20 percent of banks’ liabilities;
  - Concentration: four subsidiaries of the largest Australian banks held 86 percent share in the banking sector’s total assets at March 2018.

### Other Financial Corporations (OFC) sector
- Accounts for about 25 percent of total financial system assets and had gross assets of over 75 percent of GDP at end-March 2018.
- Largest components: MFs and ICs.
- Supervision: both RBNZ and Financial Markets Authority (FMA).
- FMA responsibilities include regulation of KiwiSaver and private superannuation schemes.

### Pension funds / KiwiSaver
- RBNZ collects quarterly data from private superannuation schemes managing assets of around NZD 28 billion at end-March 2018.
- KiwiSaver:
  - Introduced July 2007;
  - Individuals can contribute up to eight percent of pre-tax salary; employers must contribute at least three of pre-tax salary;
  - Government matches 50 cents for every dollar up to a maximum annual payment of NZ$521.43 (as at 2016);
  - RBNZ collects quarterly data from 31 fund managers;
  - KiwiSaver funds reached assets of around NZD 48.5 billion at end-March 2018 and have now surpassed NZD 50 billion.

### Insurance sector (ICs)
- There are currently 89 registered ICs in NZ, comprising of 28 life insurance and 61 nonlife companies.
- Out of these, 12 companies offer both life and nonlife insurance products.
- Around three-fourths of premium income is attributable to the branches or subsidiaries of foreign insurers (mainly Australian).
- The largest insurer, an Australian group, accounts for almost half of total non-life premium income.
- At end-March 2018 ICs had total assets of around NZD 20 billion.
- RBNZ regularly compiles and disseminates quarterly data for licensed ICs.

### Non-deposit-taking finance sector and financial auxiliaries
- NDTFCs had assets over NZD 10 billion at end-March 2018, or around one percent of total financial system assets.
- The NDTFC sector has more than halved in size since 2007 and has been winding down; many companies in receivership lead to carried-forward values that likely overstate current assets.
- Financial market infrastructure: NZClear, Exchange Settlement Account System, Real-Time Gross Settlement.
- RBNZ plans Payment Systems Replacement Program in April 2019.

---

### SRFs, data collection, and RBNZ compilation practices

### SRF production and data sources
- SRFs were introduced in 2004 to standardize MFS reporting to STA for publication in IFS.
- The RBNZ has been producing SRFs for the central bank since 2010, with time series beginning in December 2001.
- SRF-1SR is produced from the RBNZ’s general ledger accounts using a mapping framework developed in 2010.
- Each reported SRF time series is stored as a distinct object in FSIS; SRF-1SR is generated from FSIS as needed.
- The general ledger contains over 11,000 accounts.
- SU receives the general ledger accounts from the RBNZ’s Financial Services Group (FSG) within the first 10 days of the month.
- Time series received have sufficient information to identify instrument and currency, but lack counterparty residency details; SU initially uses currency of denomination as a proxy.

### Manual adjustments, valuation, and reconciliation issues
- SU makes two manual adjustments: to identify counterparties for reverse repurchase agreements and for financial derivatives (interest rate, basis, and foreign exchange swap operations).
- Differences remain between foreign positions reported in SRF-1SR and those reported by FSG in the International Reserves Template (the “SDDS Report”), due to additional manual adjustments by FSG.
- Foreign currency denominated assets are converted to NZD using market rates obtained from Bloomberg at approximately 9:12 AM from Tuesday through Saturday.
- Accrual accounting methods are used to value financial instruments on the RBNZ balance sheet, in line with IFRSs and MFSMCG recommendations.
- In the general ledger, interest accrued on deposits, loans, and debt securities is recorded in Other Assets/Liabilities as interest receivable or payable rather than together with underlying instruments; SRF-1SR reports stocks together with associated accruals.
- The RBNZ values financial assets and liabilities using market prices or fair value methods, in line with MFSMCG recommendations.

### Specific classification and mapping corrections (examples)
- Reclassified FX Swaps accounts (70206 and 70306) from Account A822222 (Settlement Accounts – Nonresidents) to A7581 (Financial Derivatives Nonresidents).
- Reclassified retained earnings accounts (91100, 91101, 91102, 91103, 92204) from Account L94 (General and Special Reserves) to Account L92 (Retained earnings).
- Split mixed-currency accounts so they contained only national or foreign currency positions; corrected mapping to filter foreign currency positions for:
  - Financial Derivatives (71018)
  - Other Assets (71608)
  - Financial Derivatives (81018)

---

### ODCs, BBS, and broad money considerations

### BBS and reporting frequency
- In 2016, RBNZ deployed a new bank balance sheet collection system (BBS) replacing the Standard Statistical Return (SSR).
- RBs submit balance sheet data in BBS report forms monthly within 12 business days of period end via secure web portal.
- SIs and DTFCs with balance sheet assets of at least NZD 100 million submit quarterly by 12 business days; those with less than NZD 100 million submit a simplified SSR annually by the last working day in April.
- Beginning in 2019, RBNZ will review statistical reporting of non-bank entities, replace simplified SSR forms, and introduce a simplified version of the BBS for harmonization and expanded ODC coverage to include SIs and DTFCs.

### Gaps and treatment of securities and repos
- BBS contains necessary information for MFSMCG classification but some gaps persist (e.g., counterparty information missing for other accounts receivable/payable and debt security liabilities; retained earnings account includes multiple components; cash collateral classification issues).
- Incomplete counterparty details for debt securities issued by ODCs prevent proper sectoring in SRF-2SR; where supplementary repository information is not available, those liabilities were allocated to the other resident sector and excluded from broad money.
- Potential amendments to broad money: If repository information shows RB debt securities are widely traded, the RBNZ may amend the definition of broad money to include some short-term debt securities issued by depository corporations subject to MFSMCG criteria.

### Cash management trusts and monthly estimation
- Monthly data for cash management trusts with more than NZD 500 million in assets will need to be estimated.
- Cash management trusts submit quarterly returns as part of the MFs survey, within 20 business days of the end of the reporting period.
- Monthly data for cash management trusts will have to be estimated from quarterly values by carrying forward the quarterly reported stock values for intervening and current months.
- Care should be taken to avoid double counting cash management trusts operated by banks; RBs report consolidated balance sheets that already include certain PIE products.

---

### OFC compilation, SRF 4SR, and related surveys

### SRF 4SR development and historical series
- SU and the mission developed bridge tables from the MFs survey and IC balance sheet survey into SRF 4SR; these bridge tables were used to compile quarterly historical data beginning in June 2014 for MFs and June 2016 for ICs.
- Historical data can be produced for all institutions of the OFC sector in SRF 4SR format: series for MFs will begin in June 2014, while data for ICs will be introduced from June 2016 onwards.
- Benchmark Recommended Action: The RBNZ to provide STA with an initial set of quarterly data in SRF 4SR based on the agreed compilation framework, including historical series from June 2014 onwards for MFs and June 2016 onwards for ICs. Deadline: December 2018.

### Data limitations and recommended improvements
- Major challenge for an OFC survey is the large number and diversity of operating institutions; major subsectors report data in different balance sheet formats and, for smaller institutions, with different timeliness.
- Time series based on SRF 4SR definitions need to be created in FSIS prior to the start of regular reporting.
- Recommended Action: SU to create the needed time series in FSIS to be able to regularly produce and disseminate data using SRF 4SR for MFs and ICs. Deadline: June 2019.
- Recommended Action: SU to amend the mapping scheme for ICs to include the classification of insurance technical reserve liabilities by counterpart sector. Deadline: December 2019.

---

### Recommended actions, deadlines, and action plan highlights

### Key recommended actions with target completion dates
- SU, jointly with FSG, to conduct a review of practices used to compile the International Reserves Template and Table E1 to document and resolve all differences. Deadline: June 2019.
- SU to develop new data reports from FSG that separately identify counterparty positions for the RBNZ’s deposits, debt securities, repurchase agreements, financial derivatives, and other accounts payable/receivable and classify the accounts properly in SRF-1SR. Deadline: September 2019.
- SU to review the repository of securities’ supplementary information to identify the counterpart sector for RBs securities. Based on these findings, to consider including them in the definition of broad money. Deadline: September 2019.
- SU to align the official monetary statistics published on the RBNZ’s website to the balance sheet and survey data compiled from the SRFs. Target Completion Date: June 2019.
- SU to create the needed time series in FSIS to be able to regularly produce and disseminate data using SRF 4SR for MFs and ICs. Target Completion Date: June 2019.
- Benchmark actions (completed as of November 2018): monthly reporting to STA of SRF 1SR (historical from December 2001) and SRF 2SR (historical from January 2013); provision to STA of initial SRF 4SR quarterly data including historical series (MFs from June 2014, ICs from June 2016).

### Training and future TA
- RBNZ does not yet report Financial Soundness Indicators (FSIs) to STA for publication on the FSI website; mission began mapping BBS source data into FSI templates.
- Mission recommended SU staff participation in MFS and FSI courses offered by the IMF in Washington DC or Singapore and suggested RBNZ could request future TA to further develop FSIs and OFC source data quality.

---

### Appendix I — IFS Country Notes (selected methodological points)
- Date of Fund Membership: August 31, 1961
- Central bank data are based on a SRF for central banks, which accords with the concepts and definitions of the IMF’s MFSMCG, 2016; departures from the MFSMCG methodology are explained in the source text.
- Relevant bid and offer exchange rates retrieved from Bloomberg at approximately 9:12 AM (New Zealand Standard Time) are used to convert the central bank’s foreign currency denominated instruments into national currency.
- Other Depository Corporations (ODCs) data: beginning in December 2016, data are based on a SRF for ODCs; for January 2013 through November 2016 data are based on a SRF for ODCs but have less conformity with the MFSMCG methodology.
- Other Financial Corporations (OFCs) data: beginning June 2016 includes ICs; data exclude Earthquake Commission and Accident Compensation Corporation (classified with general government).
- Monetary aggregates: Base Money, Broad Money, Narrow Money (M1), and historical notes on discontinued aggregates (M2, M3R, M3) with methodology aligned to MFSMCG where applicable.

*Source: 1nzlea2019001 - 1. Priority Recommendations (IMF technical assistance mission report, October 1–12, 2018).*

### 1. Priority Recommendations _____________________________________________________________________ 5

### 1. Priority Recommendations

### Summary of mission outcomes and objectives
- Mission: monetary and financial statistics (MFS) technical assistance (TA) mission visited Wellington, New Zealand during October 1–12, 2018.
- Main objectives:
  - complete the central bank Standardized Report Form (SRF 1SR);
  - review the source data and bridge table used to produce Other Depository Corporations (ODCs) Standardized Report Form (SRF 2SR);
  - assist the RBNZ to produce additional historical data in the SRFs 1SR and 2SR for the past five years;
  - review the available source data for the compilation the Other Financial Corporations (OFCs) Standardized Report Form (SRF 4SR);
  - prepare metadata for the central bank, ODC, and OFC surveys;
  - agree on a timetable for RBNZ’s SRF-reporting of its MFS.

- Work completed with RBNZ Statistics Unit (SU):
  - reviewed source data for RBNZ, Registered Banks (RBs), managed funds (MFs) and Insurance Corporations (ICs);
  - finalized the SRF compilation framework;
  - developed reports to automatically generate SRFs 1SR, 2SR from Financial Sector Information System (FSIS) by pulling source data from the RBNZ’s general ledger and ODC reporting;
  - identified need to create new series in FSIS to regularly produce and submit data for OFCs (aggregating MFs and ICs).

- Importance of OFC coverage:
  - MFs, ICs, and Non-Deposit Taking Finance Companies (NDTFCs) represent around a quarter of total financial system’s assets;
  - Excluding these sectors would significantly affect the usefulness of MFS for policy formulation, particularly as these sectors represent long-term household savings;
  - Producing OFC data will permit compilation of a financial corporations survey and support compilation of financial statistics such as flow-of-funds and Balance Sheet Approach.

- Dissemination readiness:
  - RBNZ can now compile MFS based on SRFs for national dissemination and for reporting to the IMF’s Statistics Department (STA) for publication in International Financial Statistics (IFS);
  - Historical monthly series available from:
    - December 2001 for the RBNZ;
    - January 2013 for ODCs;
    - June 2014 for MFs;
    - June 2016 for ICs.
  - Necessary data and metadata to be reported internally and to STA for publication in IFS by end-2018.
- Status: SRF-based MFS are published in IFS as of the December 2018 issue. Many recommended reclassifications were completed on-site within RBNZ’s proprietary database software.

### Priority recommendations (as summarized in Table 1)
- December 2018 – Completed as of November 2018
  - The RBNZ to report to STA, on a regular monthly basis, SRF 1SR based on the new compilation framework, including historical series from December 2001 onwards.
  - Responsible: RBNZ – Statistics Unit
- December 2018 – Completed as of November 2018
  - The RBNZ to report to STA, on a regular monthly basis, SRF 2SR based on the new compilation framework, including historical series from January 2013 onwards.
  - Responsible: RBNZ – Statistics Unit
- December 2018 – Completed as of November 2018
  - The RBNZ to provide STA with an initial set of quarterly data in SRF 4SR based on the agreed compilation framework, including historical series from June 2014 onwards for MFs and June 2016 onwards for ICs.
  - Responsible: RBNZ – Statistics Unit
- June 2019
  - SU to create the needed time series in FSIS to be able to regularly produce and disseminate data using SRF 4SR for MFs and ICs.
  - Responsible: RBNZ – Statistics Unit
- June 2019
  - SU to align the official monetary statistics published on the RBNZ’s website to the balance sheet and survey data compiled from the SRFs.
  - Responsible: RBNZ – Statistics Unit

### Follow-up and implementation
- The mission recommended a detailed action plan with the priority recommendations above. Further details are provided in the section Detailed Technical Assessment and Recommendations (in source).

### Attribution
- The mission collaborated with staff of the Statistics Unit (SU) of the Macro-Financial Department and thanked the RBNZ and MFD for hospitality and support.

### Background and context (key points)
- STA had not disseminated New Zealand’s MFS data in IFS since 2011.
- In 2010 RBNZ began monthly reporting of MFS for the central bank [SRF-1SR] with historical monthly data from December 2001.
- Prior to BBS, the data collection framework for RBs and other DTFCs lacked sufficient instrument and counterparty breakdowns to compile SRF-2SR, which stalled SRF migration and led RBNZ to cease providing MFS to STA in pre-SRF report forms in 2011.
- The RBNZ publishes monthly and quarterly macro statistics including exchange rates, household data, international position, and other indicators compiled by Statistics New Zealand. RBNZ’s disseminated MFS follow the MFSMCG.
- In 2016, RBNZ deployed a new bank balance sheet collection system (BBS) replacing the Standard Statistical Return (SSR). BBS serves as collection platform for supervisory data and contains balance sheet, income statement, capital composition, metrics, risk exposures, and macro-prudential ratios.
- Improvements and new collections over past five years:
  - MFs survey enhancements in 2014;
  - Registered bank balance sheet data compiled using BBS first disseminated April 2017 with historical data from December 2016;
  - Balance sheet data for ICs disseminated to public in February 2018.
- With BBS, RBNZ could compile SRF-2SR for ODCs; BBS is designed to be compliant with MFSMCG and contain instrument, currency, and counterpart sector identification needed for SRF-2SR. RBNZ requested IMF consultation to complete mapping of BBS to SRF-2SR and develop metadata.

### New Zealand’s financial system — key statistics and structure
- As of end-March 2018, total assets of the financial system were about 750 billion NZD, equivalent to around 310 percent of New Zealand’s gross domestic product (GDP).
- Financial system composition (NZD billions, end-March 2018; Source: Reserve Bank of New Zealand):
  - Central Bank: 29,121 — 4% of total financial sector; 100% of subsector; 12% of GDP
    - RBNZ: 29,121 — 4% 100%
  - Other Depository Corporations: 534,511 — 72% of total financial sector; 100% of subsector; 220% of GDP
    - Registered Banks: 527,366 — 71% of total; 99% of subsector; 218% of GDP
    - Nonbank deposit takers: 4,132 — 1% of total; 1% of subsector
    - Cash Management Trusts: 3,013 — 0% of total; 1% of subsector
  - Other financial corporations: 183,849 — 25% of total financial sector; 100% of subsector; 76% of GDP
    - KiwiSaver: 48,488 — 6% of total; 26% of subsector; 20% of GDP
    - Other Super: 28,221 — 4% of total; 15% of subsector; 12% of GDP
    - Wholesale: 16,261 — 2% of total; 9% of subsector; 7% of GDP
    - Retail: 38,456 — 5% of total; 21% of subsector; 16% of GDP
    - Other funds and trusts / IMP: 21,876 — 3% of total; 12% of subsector; 9% of GDP
    - Insurance Companies: 20,075 — 3% of total; 11% of subsector; 8% of GDP
    - Nonbank lending institutions (non-deposit taking): 10,472 — 1% of total; 6% of subsector; 4% of GDP
  - Total Assets: 747,481 — 308% of GDP

- Institutional roles and legislation:
  - RBNZ established in 1934; responsibilities under Reserve Bank of New Zealand Act (1989) include formulating and implementing monetary policy, promoting a sound and efficient financial system, banking supervision, and payments and settlement systems.
  - Subsequent legislation expanded RBNZ powers:
    - Anti-Money Laundering and Countering Financing of Terrorism Act (2009) — RBNZ authority to ensure compliance by banks, life insurers, and non-bank deposit takers with AML/CFT measures;
    - Insurance (Prudential Supervision) Act (2010) — authority to issue licenses to insurers and responsibility for prudential supervision of licensed insurers;
    - Non-bank Deposit Takers Act (2013) — RBNZ power as prudential regulator and licensing authority for non-bank deposit takers.
  - RBNZ acts as a depository agent in relations with the IMF.

- Other Depository Corporations (ODC) sector (end-March 2018):
  - Total assets about NZD 535 billion.
  - ODC components: Registered Banks (RBs), Savings Institutions (SIs), Deposit Taking Finance Corporations (DTFCs), Cash Management Trusts.
  - RBs: 26 operating in New Zealand; six are dual registered banking groups; 15 operate as subsidiaries; 11 operate as branches of overseas incorporated banks.
  - Cash management trusts are money market funds (MMF) investing in instruments with maturity less than one-year; issue redeemable units and are a close substitute for deposits included in broad money.
  - Banking sector characteristics:
    - RBs represent over 70 percent of total financial assets;
    - Almost 80 percent of banks’ assets are claims on the domestic private sector;
    - Foreign funding accounts for almost 20 percent of banks’ liabilities;
    - Concentration: four subsidiaries of the largest Australian banks held 86 percent share in the banking sector’s total assets at March 2018.

- Other Financial Corporations (OFC) sector:
  - Accounts for about 25 percent of total financial system assets and had gross assets of over 75 percent of GDP at end-March 2018.
  - Largest components: MFs and ICs.
  - Supervision: both RBNZ and Financial Markets Authority (FMA).
  - FMA responsibilities: enforce securities, financial reporting, and company law as they apply to financial services and securities markets; regulate securities exchanges, financial advisers and brokers, auditors, trustees and issuers including KiwiSaver and private superannuation schemes.

- Pension funds / private superannuation:
  - RBNZ collects quarterly data from private superannuation schemes managing assets of around NZD 28 billion at end-March 2018.
  - KiwiSaver:
    - Introduced July 2007;
    - Individuals can contribute up to eight percent of pre-tax salary; employers must contribute at least three of pre-tax salary;
    - Government matches 50 cents for every dollar up to a maximum annual payment of NZ$521.43 (as at 2016);
    - RBNZ collects quarterly data from 31 fund managers;
    - KiwiSaver funds reached assets of around NZD 48.5 billion at end-March 2018 and have now surpassed NZD 50 billion.

- Non-money-market investment funds (CIS and related):
  - CIS had assets of around NZD 77 billion at end-March 2018.
  - CIS types reported in MFs survey: life office funds, retail unit trusts and group-investment funds (GIFs), property trusts, wholesale trusts, and individually managed portfolios (IMPs).
  - RBNZ collects and disseminates quarterly data from these institutions, excluding property trusts.

*Source: 1nzlea2019001 - 1. Priority Recommendations (IMF technical assistance mission report, October 1–12, 2018).*

### 19.      There are currently 89 registered ICs in NZ,

### 1nzlea2019001 - 19.      There are currently 89 registered ICs in NZ,

### Insurance sector structure and key statistics
- There are currently 89 registered ICs in NZ, comprising of 28 life insurance and 61 nonlife companies.
- Out of these, 12 companies offer both life and nonlife insurance products.
- Around three-fourths of premium income is attributable to the branches or subsidiaries of foreign insurers (mainly Australian).
- The largest insurer, an Australian group, accounts for almost half of total non-life premium income.
- Only about half of non-life premium income is written by the private sector, reflecting migration of savings from insurance to investment products and the important role of government-financed coverage:
  - Accident Compensation Commission provides extensive coverage for personal injury insurance.
  - Earthquake Commission provides first loss cover for losses from earthquakes and other specified natural hazards for insured residential properties.
- At end-March 2018 ICs had total assets of around NZD 20 billion.
- The RBNZ regularly compiles and disseminates quarterly data for licensed ICs.

### Non-deposit-taking finance sector and financial auxiliaries
- The non-deposit-taking finance sector:
  - Comprises financial corporations that do not issue a prospectus or take deposits from the public.
  - Funding generally comes from RBs, financial markets or parent companies.
  - Most institutions are domestically owned.
  - The sector has more than halved in size since 2007.
  - The RBNZ compiles and disseminates quarterly data for NDTFCs, which had assets over NZD 10 billion at end-March 2018, or around one percent of total financial system assets.
- Financial auxiliaries and market infrastructure:
  - Financial market infrastructure corporations provide clearing, settlement, or recording channels for payments, securities, derivatives or other financial transactions.
  - NZClear provides clearing and settlement services for high-value debt securities and equities.
  - The Exchange Settlement Account System, run by the RBNZ along with Real-Time Gross Settlement, allows individual transactions between financial institutions to be settled electronically in real time.
  - The RBNZ plans to introduce a new Payment Systems Replacement Program in April 2019.

### SRFs, data collection, and RBNZ compilation practices
- SRFs background:
  - SRFs were introduced in 2004 to standardize MFS reporting to STA for publication in IFS.
  - Currently, over 160 countries report monetary data to STA using the SRFs.
- RBNZ SRF production:
  - The RBNZ has been producing SRFs for the central bank since 2010, with time series beginning in December 2001.
  - The SRF-1SR is produced from the RBNZ’s general ledger accounts using a mapping framework developed by the SU in 2010.
  - Each reported SRF time series is stored as a distinct object in FSIS; SRF-1SR is generated from FSIS as needed.
- General ledger and compilation specifics:
  - The general ledger contains over 11,000 accounts (many no longer in use) for assets, liabilities, capital and reserves, and income and expenses.
  - Data for the RBNZ’s balance sheet are disseminated two to three weeks after the end of the reference month.
  - SU receives the general ledger accounts from the RBNZ’s Financial Services Group (FSG) within the first 10 days of the month.
  - Time series received have sufficient information to identify instrument and currency, but lack counterparty residency details; SU initially uses currency of denomination as a proxy.
  - FSG provides supplemental information to assist identification of resident and non-resident sector positions.
- Manual adjustments and remaining discrepancies:
  - SU makes two manual adjustments: to identify counterparties for reverse repurchase agreements and for financial derivatives (interest rate, basis, and foreign exchange swap operations).
  - Differences remain between foreign positions reported in SRF-1SR and those reported by FSG in the International Reserves Template (the “SDDS Report”), due to additional manual adjustments by FSG.
  - SU’s processes are not fully able to identify RBNZ positions with non-residents; additional instruments and derivative types need adjustment coverage.
- Valuation and accounting:
  - Foreign currency denominated assets are converted to NZD using market rates obtained from Bloomberg at approximately 9:12 AM from Tuesday through Saturday (capturing closing prices from international markets), approximating market conditions for the previous day’s RBNZ balance sheet.
  - Accrual accounting methods are used to value financial instruments on the RBNZ balance sheet, in line with IFRSs and MFSMCG recommendations.
  - In the general ledger, interest accrued on deposits, loans, and debt securities is recorded in Other Assets/Liabilities as interest receivable or payable rather than together with underlying instruments; SRF-1SR reports stocks together with associated accruals.
  - The RBNZ values financial assets and liabilities using market prices or fair value methods, in line with MFSMCG recommendations.

### Specific instrument treatments and classification issues
- RBNZ short-term debt securities:
  - The RBNZ issues unrated short-term debt securities that accrue interest, considered credit-risk free and currently only held by RBs.
  - RBNZ bills are classified as excluded from the monetary base since the RBNZ does not require banks to hold reserves.
  - If these securities become tradable in secondary markets, the RBNZ would need to track their ownership.
  - RBNZ bills owned by money holding sectors, such as OFCs, should be included in the stock of broad money.
- IMF balances:
  - New Zealand’s positions with the IMF are on the balance sheet of the Debt Management Office of the Treasury.
  - The RBNZ only has minor amounts of IMF No. 1 Account and No. 2 Account deposits on its balance sheet as depository agent.
- Mapping and ledger corrections (examples reviewed and corrected):
  - Reclassified FX Swaps accounts (70206 and 70306) from Account A822222 (Settlement Accounts – Nonresidents) to A7581 (Financial Derivatives Nonresidents).
  - Reclassified retained earnings accounts (91100, 91101, 91102, 91103, 92204) from Account L94 (General and Special Reserves) to Account L92 (Retained earnings).
  - Split mixed-currency accounts so they contained only national or foreign currency positions; corrected mapping to filter foreign currency positions for:
    - Financial Derivatives (71018)
    - Other Assets (71608)
    - Financial Derivatives (81018)

### ODCs, BBS, and broad money considerations
- ODC coverage and reporting:
  - ODCs comprise RBs, SIs, DTFCs, and cash management trusts.
  - RBs submit balance sheet data in BBS report forms monthly within 12 business days of period end via secure web portal.
  - SIs and DTFCs with balance sheet assets of at least NZD 100 million submit quarterly by 12 business days; those with less than NZD 100 million submit a simplified SSR annually by the last working day in April.
- 2019 reporting changes:
  - Beginning in 2019, the RBNZ will review statistical reporting of non-bank entities to better align data with RB reports, replace simplified SSR forms, and introduce a simplified version of the BBS for harmonization and expanded ODC coverage to include SIs and DTFCs.
  - SU should conduct a cost/benefit analysis before including non-bank deposit-taker data into broad money definitions to ensure sufficient materiality.
- BBS data adequacy and gaps:
  - The balance sheet information collected for RBs contains necessary information for MFSMCG classification, but some minor gaps persist (e.g., counterparty information missing for other accounts receivable/payable and debt security liabilities; retained earnings account includes multiple components; cash collateral classification issues).
  - Incomplete counterparty details for debt securities issued by ODCs prevent proper sectoring in SRF-2SR; where supplementary repository of securities information is not available, those liabilities were allocated to the other resident sector and excluded from broad money.
- Potential amendments to broad money:
  - If repository information shows RB debt securities are widely traded, the RBNZ may amend the definition of broad money to include some short-term debt securities issued by depository corporations that can be converted into currency or transferable deposits at short notice at, or close to, their full nominal value.
  - MFSMCG recommends securities with original maturity of more than two years be excluded from broad money. To be part of broad money, securities must be owned by sectors other than nonresidents, the central government, and depository corporations.
- Other classification notes:
  - BBS line item “Other Equity Investments” captures RBs ownership of units in investment funds; additional information on fund type and issuer would aid MFSMCG reporting:
    - Investments in overseas-issued investment funds should be foreign assets.
    - Investments in cash management trusts should be classified as claims on ODCs.
    - Units in non-MMFs should be classified as claims on OFCs.
  - RBs repurchase agreement liabilities to money holding sectors are captured in BBS; although no banks reported balances as of Q3-2018, if such repos occur they should be classified with deposits.
  - Interest is recorded on an accrual basis and banks value assets/liabilities consistent with MFSMCG recommendations; separate accrued interest data by instrument could help reconciliation with the repository of securities.
  - Each bank uses New Zealand’s Generally Accepted Accounting Practice standards to convert foreign currency positions into NZD using the closing rate at the end of each reporting period.
  - The State Services Commission maintains an up-to-date list of public entities to assist reporting institutions in classifying accounts and improving net credit to government calculations; the list is referenced in RBNZ survey guidelines.

### Recommended actions and deadlines
- SU, jointly with FSG, to conduct a review of practices used to compile the International Reserves Template and Table E1 to document and resolve all differences. Deadline: June 2019.
- SU to develop new data reports from FSG that separately identify counterparty positions for the RBNZ’s deposits, debt securities, repurchase agreements, financial derivatives, and other accounts payable/receivable and classify the accounts properly in SRF-1SR. Deadline: September 2019.
- Benchmark Recommended Action: The RBNZ to report to STA, on a regular monthly basis, SRF 1SR based on the new compilation framework, including historical series from December 2001 onwards. Deadline: December 2018.
- Recommended Action: SU to review the repository of securities’ supplementary information to identify the counterpart sector for RBs securities. Based on these findings, to consider including them in the definition of broad money. Deadline: September 2019.

*Source: 1nzlea2019001 - 19.      There are currently 89 registered ICs in NZ,*

### 51.      Monthly data for cash management trusts with more than NZD 500 million in

### 1nzlea2019001 - 51.      Monthly data for cash management trusts with more than NZD 500 million in

### Cash management trusts and ODC coverage
- Monthly data for cash management trusts with more than NZD 500 million in assets will need to be estimated.
- Cash management trusts submit quarterly returns as part of the MFs survey, within 20 business days of the end of the reporting period.
- Investment managers with less than NZD 500 million in a cash management trust are required to submit a March annual return by the last business day of April.
- Because the collection frequency and compilation of balance sheet data differ from those of RBs, SIs, and DTFCs, the RBNZ has technical challenges adding this sector to the coverage of ODCs.
- Monthly data for cash management trusts will have to be estimated from quarterly values; this can be done by carrying forward the quarterly reported stock values for intervening and current months.
- SU will regularly monitor the size of the independent cash management trusts and, when material, consider including them in the coverage of ODCs and include liabilities in the definition of broad money.
- Care should be taken to avoid double counting cash management trusts operated by banks: RBs report their balance sheets on a consolidated basis for the purposes of compiling MFS, so subsidiary companies offering portfolio investment entity (PIE) products are already part of ODC coverage.
- PIEs created in 2007 provide investors with lower tax rates on interest income than on other types of deposits; most PIE products are offered by banking groups as an additional investment option to their retail clients and PIEs offered by bank subsidiary companies only invest in short-term financial products offered by their parent bank.
- Subsidiaries of banks report cash management trust balance sheets twice to the RBNZ: once within the balance sheet of RBs and once within the MF survey.
- Only MFs run by independent entities or bank subsidiaries that are not included in consolidated balance sheet reports should be added into the sector.
- In the new SRF 2SR, PIE products should be classified as units in money market investment funds rather than deposits.

### Standardized Report Form 2SR: bridge tables, mapping, and historical series
- Prior to the mission, the SU produced a bridge table demonstrating how the accounts RBs are mapped within FSIS to the different items of SRF 2SR; the mission reviewed the classification and agreed on a final mapping.
- The source data derive from data provided in the BBS system and the time series begin in December 2016. The bridge table format has been shared with RBNZ staff.
- RBNZ and the mission agreed to reclassify several items in the bridge table:
  - Dividends receivable/payable were reclassified from miscellaneous assets/liabilities (residents) to dividends receivable/payable.
  - Current/deferred tax assets/liabilities were reclassified from settlement accounts (other resident sectors) to miscellaneous asset/liabilities (residents).
  - Goodwill and other intangibles were reclassified from settlement accounts (other resident sectors) to other nonfinancial assets.
  - Accounts used for net adjustments for deposits, debt securities, and borrowings that reconcile the reported BBS data with information in banks’ disclosure statements were reclassified from settlement accounts (other resident sectors) to miscellaneous liabilities.
  - All other liabilities were reclassified from settlement accounts (other resident sectors) to miscellaneous liabilities.
  - Branch capital was reclassified from valuation adjustment to funds contributed by owners.
- SU has processes to retrieve the BBS data from FSIS in a ready-to-use format; the extracted data can quickly and easily be used to update the file containing the bridge tables, allowing rapid and accurate preparation of the SRF 2SR.
- The RBNZ worked with the mission to construct historical series for SRF 2SR. Historical data can be compiled using information from the SSR for RBs beginning January 2013.
- The mission and SU mapped the SSR data into the SRFs, maintaining consistency with previously backdated series for broad money, private sector credit, and domestic credit, and refined definitions of household deposits, housing loans, and business loans for consistency with historical information in RBNZ’s databases.
- Benchmark Recommended Action: The RBNZ to report to STA, on a regular monthly basis, SRF 2SR based on the new compilation framework, including historical series from January 2013 onwards. Deadline: December 2018.

### Depository Corporations Survey and SRF-derived analytical surveys
- Sectoral balance sheets constructed using SRFs provide disaggregated information by type of financial instrument, by currency, and by counterpart sector that facilitates the compilation of analytical surveys.
- Analytical surveys can be automatically generated from the SRFs. The central bank, ODCs, and depository corporations surveys compiled from the SRFs 1SR and 2SR, with data at end-December 2017, are presented along with the rest of the financial sector’s data in the Integrated Monetary Database shared with RBNZ staff.
- The analytical surveys obtained from SRFs 1SR and 2SR are consistent with the monetary data disseminated by the RBNZ on its website; the current monetary data disseminated in the Statistics sections of the RBNZ webpage are based on the MFSMCG methodology and their key aggregates are derived from the SRF’s analytical surveys.

### Other Financial Corporations (OFC): priority for quarterly OFC survey
- The magnitude of the OFC sector in New Zealand makes a priority the compilation and dissemination of a quarterly OFC survey; excluding a substantial portion of the financial sector from MFS would significantly affect their usefulness.
- RBNZ already has data collections for the most important subsectors of OFCs: MFs and ICs.
- A major challenge for an OFC survey is the large number and diversity of operating institutions; major subsectors report data in different balance sheet formats and, for smaller institutions, with different timeliness.
- RBNZ collects data from smaller MFs on an annual basis and carries forward the stock values of the annual data through the next year as a proxy for a quarterly submission.
- While generally adequate for SRFs, some data lack needed disaggregation by financial instrument, by currency, and/or by counterpart sector.
- The RBNZ issued guidelines and definitions for each of the reported items in the MFs survey; instructions ask MFs to convert foreign-currency assets and liabilities into New Zealand dollars at the midpoint of the appropriate buy and sell rates at the end of the reference period and to use valuation methods in line with MFSMCG recommendations.
- Time series based on SRF 4SR definitions need to be created in FSIS prior to the start of regular reporting.
- SU and the mission developed bridge tables from the MFs survey and IC balance sheet survey into SRF 4SR; these bridge tables were used to compile quarterly historical data beginning in June 2014 for MFs and June 2016 for ICs. These data will be used by STA to create the initial dataset for OFCs for inclusion in IFS.
- Benchmark Recommended Action: SU to create the needed time series in FSIS to be able to regularly produce and disseminate data using SRF 4SR for MFs and ICs. Deadline: June 2019.

### Pension Funds (PFs)
- The PF subsector is rapidly growing, mainly driven by growth in balances in KiwiSaver accounts.
- RBNZ collects balance sheet data from all fund managers that offer KiwiSaver and other private superannuation schemes as part of its MFs survey; fund managers are required to submit their financial information to the RBNZ within 20 working of the end of the reference period.
- The PFs sector does not include the New Zealand Superannuation Fund, which is a sovereign wealth fund; New Zealand currently provides universal pension benefits for people over 65 years of age and the purpose of the Superannuation Fund is to partially pre-fund the future cost of the New Zealand Superannuation pension.
- The balance sheet of PFs, as reported by their fund managers, contains sufficient information on the types of instruments for proper classification along with some information on the counterparty of investments.
- KiwiSaver balances represent almost two-thirds of total private superannuation assets. Almost half of KiwiSaver’s assets are invested abroad.
- Of the money remaining in New Zealand, a little over 60 percent is invested either directly in equities or in unit trusts.
- Investment in government securities accounts for less than ten percent of the domestic asset portfolio.
- Overseas positions of other private superannuation account for about 55 percent of total investment assets.
- Almost 80 percent of the domestic assets of other registered superannuation are placed either in investment pools or directly in equity.
- Reported balance sheet data lack counterpart sector information for financial derivatives, other accounts receivable/payable, and debt security liabilities; mapping of source data to SRF 4SR allocated these accounts to the counterparty sector identified by the RBNZ as having the largest volume of transactions.
- The balance sheet of PFs lacks information on the currency of denomination of financial assets and liabilities; the mission agreed with the authorities to classify positions with residents in national currency and positions in financial assets and liabilities with nonresidents in foreign currency.

### Non-MMF investment funds (Collective Investment Schemes, CIS)
- CISs are divided into six classifications: life office funds, retail unit trusts and GIFs, cash management trusts, wholesale trusts, IMPs, and property unit trusts.
- Cash management trusts are classified as ODCs. The RBNZ does not collect balance sheet data for property management trusts.
- Fund managers administering CIS are required to submit their financial statements to the RBNZ within 20 working days of the reference period.
- Asset allocations by CIS type:
  - Life office funds are predominantly invested (73 percent) in New Zealand issued assets; a third of domestic assets are invested in long-term government debt while cash and short-term debt securities account for another 25 percent of assets; the bulk of remaining assets are investments in unit trusts.
  - Almost 40 percent of the assets of retail unit trusts are invested overseas; of their domestic assets, a little under 40 percent are invested in short-term assets (deposits and short-term securities), around 45 percent is invested in equities and units, and the remainder mainly in long-term debt securities.
  - Over 70 percent of investments with wholesale funds are obtained from large institutional investment schemes like KiwiSaver and other registered superannuation; wholesale funds have generally invested abroad (60 percent of assets), followed by domestic investments in listed shares and long-term debt securities.
  - IMPs are concentrated on managing individual’s asset portfolios, typically of high net-worth individuals.
- Limitations to CIS data collection are the same as described for PFs; the collection framework includes a breakdown on ownership of units in investment fund shares useful for SRF 4SR compilation.

### Insurance Companies (ICs)
- RBNZ collects quarterly balance sheet and income statement data for licensed life and nonlife ICs operating in New Zealand; published statistics account for almost 90 percent of total assets of the sector.
- ICs are required to submit financial statements to the RBNZ within 40 working days of the end of the reference period.
- ICs use different accounting standards in their reported balance sheets: generally IFRS or New Zealand’s GAAP; some overseas based insurers use national standards of their home territory, leading to mixed methodologies for accrual accounting and exchange rates.
- Accrued interest is generally reported as part of the corresponding value of the underlying financial instrument. Reporters are asked to use valuation methods in line with MFSMCG recommendations.
- The balance sheet information reported by ICs can be used to populate SRF 4SR but is tailored to regulatory requirements; missing data include currency of denomination and counterpart sector for deposits, loans, insurance technical reserves, financial derivatives, other accounts receivable/payable, and debt security liabilities.
- Mapping of source data to SRF 4SR allocated these accounts to the counterparty sector assumed to have the largest volume of transactions.
- Supplemental details on the counterpart sector to insurance technical reserves are collected but not currently disseminated; RBNZ collects information to identify if the insurance covers domestic household or corporate entities as well as non-residents, but these data have not yet been validated and are not ready for dissemination.
- Recommended Action: SU to amend the mapping scheme for ICs to include the classification of insurance technical reserve liabilities by counterpart sector. Deadline: December 2019.
- ICs’ investment composition: almost one-third of their assets are invested abroad; almost 20 percent of their assets represent claims on NZ’s DC system and around seven percent are in government securities; they also have significant reinsurance assets and other claims on OFCs.

### Other institutional units of the OFC sector and NDTFCs
- The NDTFC sector has been winding down over the past decade; total assets are around half the level they were a decade ago.
- Many companies have been in receivership and have not submitted updated information to the RBNZ; the last available quarterly or annual values have been carried forward by the SU for multiple years, meaning the total asset size of the sector is likely overstated.
- Even with aggregated balance sheets, NDTFCs could be included in SRF 4SR but their current contribution to the OFC sector is relatively small.
- Report forms for the NDTFC sector will be reviewed along with statistical reporting of other non-bank entities; new reports will be better aligned with data provided in the BBS and harmonize data for all NDTFCs with classifications and sectoring of data for MFs and ICs.
- Once data are compiled in the new system, SU should examine if the size of NDTFCs warrants inclusion in the OFC sector’s data.

### Standardized Report Form 4SR, bridge tables, and historical series for OFCs
- The mission and SU created a bridge table to map source data for each OFC subsector to SRF 4SR; bridge tables for MFs and ICs with data as at end-December 2017 have been shared with RBNZ staff.
- With the bridge table to SRF 4SR, RBNZ will be able to produce SRF 4SR, an OFC survey, and a financial corporations survey; SRF 4SR can be produced using the bridge tables, permitting rapid and accurate preparation.
- Historical data can be produced for all institutions of the OFC sector in SRF 4SR format: series for MFs will begin in June 2014, while data for ICs will be introduced from June 2016 onwards.
- Benchmark Recommended Action: The RBNZ to provide STA with an initial set of quarterly data in SRF 4SR based on the agreed compilation framework, including historical series from June 2014 onwards for MFs and June 2016 onwards for ICs. Deadline: December 2018.

*Source: 1nzlea2019001 - Monthly data for cash management trusts with more than NZD 500 million in (IMF mission report excerpts).*

### 85.      Deviations from the (MFSMCG methodology are documented in New Zealand’s

### 1nzlea2019001 - 85.      Deviations from the (MFSMCG methodology are documented in New Zealand’s

### B. Use of MFS Derived from the SRFs
- Adoption of the new SRF framework creates an opportunity for the RBNZ to revise its national disseminated monetary statistics and make them consistent with the data published by the IMF.
- Data based on the new compilation framework will begin only in January 2013.
- Reclassifications to historical data will ensure consistency and provide users with a sufficiently long time series for research and analysis.
- Coordination with STA and APD could enable adoption of this framework for IMF surveillance and program work; analytical series required by APD could be constructed from SRF-based data reported to STA.
- Aggregate level time series will need to be created in FSIS prior to the RBNZ’s dissemination of SRF-based data on its website.
  - The RBNZ calculates all aggregates from raw data in the FSIS system.
  - New series based on the SRF compilation framework must be developed in FSIS prior to the RBNZ’s publication of SRF-based MFS on its website.
  - In the meantime, the RBNZ is committed to providing SRF-based MFS data to STA for publication in IFS and internal IMF use.
- Recommended Action: SU to align the official monetary statistics published on the RBNZ’s website to the balance sheet and survey data compiled from the SRFs.
- RBNZ stakeholder management processes:
  - SU regularly meets with Statistics New Zealand prior to major revisions or introducing new datasets.
  - External stakeholders are informed via a Statistics News and Updates section of the RBNZ website prior to release.
  - Detailed technical documents and methodological notes accompany new data introductions; concordance information between old and new tables is provided.
  - Ideally, data users are provided both old and new datasets in parallel; SU will explain large differences.
- Internal rollout:
  - SU staff prepared to introduce SRF-based MFS to internal RBNZ users.
  - RBNZ policy makers regularly exposed to MFS; data for the OFC sector is highly valuable for financial stability analysis.
  - New SRF-based dataset contains money, credit, and other aggregates compiled from the broadest set in terms of institutional coverage.
  - SU will advertise the new dataset’s availability, strengths and limitations, and support internal users during transition.

### C. Data Provision to the Fund
- New Zealand aims to eventually subscribe to the Special Data Dissemination System (SDDS) Plus.
- A National Data Summary Page with selected data for central bank survey, depository corporations survey, interest rates, and stock market will need to be created.
- The RBNZ could post the entire sectoral balance sheets (SRFs 1SR, 2SR, and 4SR) and monetary aggregates (5SR), along with interest rates and share prices (6SR) in a SDMX format to make all MFS available to external users simultaneously.
- Until full posting on a SDDS Plus National Data Summary Page, the RBNZ will continue to submit all MFS to STA using the Integrated Collection System (ICS).
  - The RBNZ already regularly uses ICS to provide its MFS to the Fund; however, additional staff need to be trained on its use.
- RBNZ staff will review the possibility to publish the entire Integrated Monetary Database file on the IMF’s external website.
  - Review needed for confidentiality of the data and assessment of whether pre-SRF based data for RBs are fit for purpose.
  - Publication of full SRF-based MFS provides granular data (e.g., foreign currency asset and liability positions) and permits use of New Zealand’s full set of MFS in cross-country research.

### D. Future MFS Developments, Training, and Technical Assistance
- The mission achieved all its original objectives and made substantive progress toward the authorities’ medium-term goals.
  - Scope: assist RBNZ to review frameworks used to compile SRFs 1SR and 2SR and assess adequacy of source data for production of a balance sheet for OFCs.
  - With SU support, bridge tables were developed to generate revised SRFs 1SR and 2SR and create SRF 4SR for OFCs.
- Additional work needed to improve quality of source data for the OFC survey; this requires additional resources, time, and close collaboration to update data collection frameworks and obtain needed information.
- The RBNZ does not yet report Financial Soundness Indicators (FSIs) to STA for publication on the FSI website.
  - RBNZ has a system for regular compilation and dissemination of FSIs stored in FSIS and published in the six-month Financial Stability Report.
  - RBNZ prepares selected FSIs for IMF surveillance but does not compile and report them nor their metadata to STA.
  - The mission began mapping source data from the BBS into the FSI templates and reviewed FSI report forms; the mission stressed the importance of compiling metadata.
  - The mission agreed with SU staff to continue the work remotely; RBNZ could request future TA to further develop this dataset.
- Training recommendation:
  - Mission stressed importance of SU staff participation in MFS and FSI courses offered by the IMF in Washington DC or Singapore.
  - Officials directly involved in the compilation of MFS should be nominated for future training.

### ACTION PLAN (selected prioritized actions, targets, and outcomes)
- Outcome Indicator: Publish New Data Set online and in IFS
  - H: The RBNZ to report to STA, on a regular monthly basis, SRF 1SR based on the new compilation framework, including historical series from December 2001 onwards.
    - Verifiable Indicator: Central Bank survey data published in IFS.
    - Target Completion Date: Benchmark December 2018 - Completed as of November 2018
  - H: The RBNZ to report to STA, on a regular monthly basis, SRF 2SR based on the new compilation framework, including historical series from January 2013 onwards.
    - Verifiable Indicator: ODCs survey data published in IFS.
    - Target Completion Date: Benchmark December 2018 - Completed as of November 2018
  - H: SU to create the needed time series in FSIS to be able to regularly produce and disseminate data using SRF 4SR for MFs and ICs.
    - Risk/Assumption: Creation of series in FSIS will compete with other projects for priority.
    - Verifiable Indicator: 4SR produced from FSIS. Risk of delayed regular reporting of SRF 4SR if series not created.
    - Target Completion Date: Benchmark June 2019
  - H: The RBNZ to provide STA with an initial set of quarterly data in SRF 4SR based on the agreed compilation framework, including historical series from June 2014 onwards for MFs and June 2016 onwards for ICs.
    - Verifiable Indicator: OFCs Survey published in IFS.
    - Target Completion Date: Benchmark December 2018 - Completed as of November 2018
  - H: SU to align the official monetary statistics published on the RBNZ’s website to the balance sheet and survey data compiled from the SRFs.
    - Verifiable Indicator: Data published on the RBNZ’s website will be aligned with the data published in IFS.
    - Target Completion Date: June 2019
- Outcome Indicator: Source Data are Adequate to ensure compliance with Statistical Manuals
  - M: SU, jointly with the FSG to conduct a review of the practices used to compile the International Reserves Template and Table E1 to document and resolve all differences.
    - Verifiable Indicator: Discrepancies between SU and FSG on international reserves are resolved or documented.
    - Target Completion Date: June 2019
  - M: SU to develop new data reports from FSG that separately identify counterparty positions for the RBNZ’s deposits, debt securities, repurchase agreements, financial derivatives, and other accounts payable/receivable and classify the accounts properly in SRF-1SR.
    - Dependent on findings of review.
    - Target Completion Date: September 2019
  - M: SU to review the repository of securities’ supplementary information to identify the counterpart sector for RBs securities. Based on findings, to consider including them in the definition of broad money.
    - SU to inform STA of its decision regarding including the debt securities within broad money.
    - Target Completion Date: September 2019
  - M: SU to amend the mapping scheme for ICs to include the classification of insurance technical reserve liabilities by counterpart sector.
    - Risk that data quality will remain insufficient.
    - Verifiable Indicator: Insurance technical reserves liabilities will be reported with improved counterparty details.
    - Target Completion Date: December 2019

*International Monetary Fund*

### Appendix I. IFS Country Notes for New Zealand

### Appendix I. IFS Country Notes for New Zealand

### Membership and standard sources
- Date of Fund Membership: August 31, 1961
- Standard Sources: Reserve Bank of New Zealand (RBNZ); Statistics New Zealand

### Exchange rates and international liquidity
- Exchange rates indicative of the 3 p.m. market mid-rate sourced from Reuters and published by the Reserve Bank of its website.
- Beginning in April 1991, exchange rates are indicative of the 11:10 a.m. market mid-rates sourced by Reuters.
- Beginning May 2015, exchange rates are indicative of the 2 p.m. WM/Reuters fixes published by the New Zealand FMA.
- International Liquidity: Gold (National Valuation) (line 1and) is equal to Gold (Million Fine Troy Ounces) (line 1ad), valued at SDR 35 per fine troy ounce and converted into U.S. dollars at the dollar/SDR rate on the country page for the United States. Source: OECD

### Central bank reporting and valuation practices
- Central bank data are based on a SRF for central banks, which accords with the concepts and definitions of the IMF’s MFSMCG, 2016; departures from the MFSMCG methodology are explained in the source text.
- Relevant bid and offer exchange rates retrieved from Bloomberg at approximately 9:12 AM (New Zealand Standard Time) are used to convert the central bank’s foreign currency denominated instruments into national currency.
- Claims on Nonresidents and Liabilities to Nonresidents include some accounts in foreign currency with resident economic sectors; residency is determined by currency of denomination.
- Foreign currency denominated cash balances and accounts receivable are carried at amortized cost less impairment losses.
- Currency demonetized before 1 July 2004 is recognized as a contingent liability, except for a provision retained in the Statement of Financial Position to cover expected future redemptions.
- For currency demonetized from 1 July 2004, the Bank records a liability equal to the face value of that currency still in circulation.
- Collectors' currency: face value issued before 1 July 2004 is recognized as a contingent liability; collectors' currency issued from 1 July 2004 is recorded as a liability equal to face value.
- Prior to August 2004 short sales of bonds were netted off against bonds in marketable securities; from August 2004 short sales are reported as liabilities denominated in foreign currency.
- A provision for the payment of dividends to the New Zealand government is recorded after a direction is given by the Minister of Finance.

### Other Depository Corporations (ODCs)
- Comprises RBs. Data exclude SIs, DTFCs, and cash management trusts.
- Beginning in December 2016, data are based on a SRF for ODCs, which accords with the concepts and definitions of the IMF’s MFSMCG; departures from the MFSMCG methodology are explained.
- Assets and liabilities denominated in foreign currency are converted into New Zealand dollars in accordance with New Zealand GAAP.
- Financial assets and liabilities without economic sectorization are allocated to the economic sector with the largest volume of transactions.
- The holder of securities issued by ODCs is unavailable; short- and long-term promissory notes, commercial paper, debentures, preferred stock, collateralized securities, and negotiable certificates of deposit issued by ODCs are included as securities other than shares excluded from broad money held by other resident sectors.
- Securities other than Shares Excluded from Broad Money includes some liabilities to ODCs.
- Some accrued interest is included in Other Items (Net) rather than in outstanding amounts of financial assets and liabilities.
- Loans include cash collateral received in relation to derivative trades.
- Adjustments to match ‘Net loans & advances’, ‘Total deposits’, ‘Total debt securities’ and ‘Total borrowing’ from reported balance sheet data to information reported in Disclosure Statements are included in Other Items (Net).
- For January 2013 through November 2016: although data are based on a SRF for ODCs, they have less conformity with the MFSMCG methodology and therefore are not strictly comparable to data for later periods; liabilities data for currency & deposits, debt securities, and loans over this period have been estimated using an unsuitable data source.
- A time series for the assets and liabilities of RBs will be published in New Zealand’s quarterly sectoral balance sheets, which are currently being developed.
- Valuation adjustment is included in Other Items (Net) rather than in Shares and other Equity.

### Other Financial Corporations (OFCs) and investment vehicles
- Comprises life office funds, KiwiSaver funds, registered superannuation funds, retail unit trusts and GIFs, wholesale trusts, and IMPs. Data exclude property unit trusts and non-DTFCs.
- Beginning June 2016, includes ICs. Data exclude reinsurance corporations with no New Zealand primary insurance and ICs with gross annual premiums of less than NZD 50 million or less than total assets of NZD 500 million at financial year end.
- Data exclude the Earthquake Commission and the Accident Compensation Corporation (classified with general government).
- Data for MFs are presented on an unconsolidated basis and include cross investments between various types of institutions.
- Data are based on a SRF for OFCs, which accords with the concepts and definitions of the IMF’s MFSMCG, 2016; departures are explained.
- Data for investment managers with total assets of less than NZD 500 million are only available on an annual basis; intervening and current quarters after the last calendar year have been estimated by carrying forward the data.
- ICs generally convert assets and liabilities denominated in foreign currency into New Zealand dollars in accordance with NZ IFRS or NZ GAAP.
- Allocation rules when breakdowns are unavailable: to the economic sector, financial instrument, or currency having the largest volume of transactions, or distributed proportionally.
- Claims on Depository Corporations includes holdings of foreign currency; holdings of national currency are included in transferable deposits.
- Claims on Public Nonfinancial Corporations are included in Claims on Other Resident Sectors.
- Claims on Private Sector includes loans to other sectors; Claims on OFCs includes securities issued by other nonfinancial corporations.
- Financial derivatives positions of ICs are classified as with ODCs; of MFs are classified as with OFCs.
- Other accounts receivable and payable of MFs are included in Other Items (Net) rather than as claims on and liabilities to corresponding economic sectors.
- Shares and other equity of life ICs is calculated by netting total assets against total liabilities.
- Other Items (Net) includes investment in fixed assets overseas.

### Financial Corporations (general)
- See notes on central bank, ODCs, and OFCs for methodology and classification details.

### Monetary aggregates and national money definitions
- Base Money: calculated from liability data in central bank sections; national definition accords with MFSMCG concepts and definitions.
- Broad Money: calculated from liability data in central bank and ODCs; national definition accords with MFSMCG.
- Narrow Money (M1): comprises currency outside M3 financial institutions plus check balances in New Zealand dollars, less interinstitutional transaction balances and central government demand deposits. Beginning in December 2016, M1 comprises currency held by the public and transaction balances of money-holding sectors with depository corporations in New Zealand dollars. Currency held by the public comprises currency issued by the Reserve Bank less currency held by RBs. Transaction deposits comprise “on call” deposit balances usable for third party transfer payments. Depository corporations comprise the RBNZ and all RBs. Money-holding sectors include other financial institutions, local governments, public nonfinancial corporations, other nonfinancial corporations, and other resident sectors.
- M2: comprised M1 and all other call deposits in New Zealand dollars not included in M1, less interinstitutional call balances; M2 was discontinued in December 2016.
- M3R: comprised currency outside M3 institutions and their total New Zealand dollar deposits, less interinstitutional deposits, central government deposits, and deposits from nonresidents; M3R was discontinued in December 2016.
- M3: comprised all New Zealand dollar funding of M3 institutions; M3 was discontinued in December 2016.
- Broad Money (national): comprises currency held by the public and transaction balances, savings, and term deposits in national and foreign currency of money-holding sectors with depository corporations.

### Interest rates and market rates
- Central Bank Policy Rate (End of Period): Official Cash Rate (OCR) around which the Reserve Bank transacts with the market; OCR is reviewed eight times a year (every six and a half weeks).
- Discount Rate (End of Period): rate at which the Reserve Bank discounts eligible 28-day Reserve Bank bills to the market.
- Money Market Rate: New Zealand Overnight Interbank Cash Average rate on secured and unsecured overnight transactions between banks.
- Treasury Bill Rate: tender rate on three-month treasury bills.
- Deposit Rate: maximum rate offered by banks on 31- to 89-day small deposits. Beginning in March 1988, quarterly weighted averages for RBs’ total deposits in national currency. Beginning in January 1990, weighted average rate offered by New Zealand's six largest banks on six-month deposits of $NZ10,000 or more, each bank's rate being weighted according to its share of the group's total New Zealand dollar deposits.
- Lending Rate: weighted average interest rate charged by RBs on loans to New Zealand residents (households, business and agriculture), weighted by loan amounts.
- Government Bond Yield: yield on government bonds. Beginning in January 1987, rate on the five-year 'benchmark' bond selected by the Reserve Bank to provide a representative five-year government bond rate.

### Prices, production, and labor statistics
- Share Prices (End of Period): share price index, base 1960. Beginning in January 1961, share price index base November 1978. Beginning in January 1967, general index on shares, base January 1968. Beginning in June 1986, gross index calculated by the New Zealand Stock Exchange, base June 1986; includes all shares of all public companies listed on the NZSX.
- Producer Prices: Source: Statistics New Zealand. Weight Reference Period: fourth quarter 2010; Coverage: outputs indexes and inputs indexes; Number of Items in the Basket: approximately 13,000 individual commodity items surveyed from about 3,000 respondents; Basis for Calculation: since March 1996, PPI produced using ANZSIC industry groups.
- Consumer Prices: Source: Statistics New Zealand. Weight Reference Period: second quarter 2006; Geographical Coverage: all resident households living in permanent dwellings; Number of Items in the Basket: expenditure weight index derived from 2300 HES expenditure items grouped to about 360 items in the CPI regimen; Basis for Calculation: the annual Household Economic Survey (HES).
- Labor Cost Index: includes salaries and wage rates, overtime wage rates, and some nonwage labor-related costs like annual leave, medical insurance, and low-interest loans; covers all employees aged 15 years and over in all occupations and all industries except domestic services.
- Manufacturing Production: data sourced from the OECD database. Index of manufacturing gross domestic product, base 1995-96, year beginning April 1.
- Manufacturing Employment: Statistics New Zealand data on persons employed in manufacturing.

### International transactions, trade, and external positions
- All data on trade are from Statistics New Zealand. Index series are chain-linked Fisher Ideal type, base second quarter 2002.
- Merchandise export indexes calculated using NZ dollar f.o.b.-values; merchandise import indexes use NZ dollar v.f.d.-values (value of goods excluding cost of freight and insurance). Prior to the September 2003 quarter, merchandise import indexes used c.i.f.-values.
- Volume of Exports: Statistics New Zealand Fisher index of volume of exports, base July 1988-June 1989. Butter: Statistics New Zealand data reported in thousand metric tons.
- Volume of Imports: Statistics New Zealand Fisher index of volume of imports, base July 1988-June 1989.

### Balance of payments, IIP, and national accounts
- Annual balance of payments data for years prior to 1980 are compiled on the basis of fiscal years ending March 31. From 1980 onwards, data are on a calendar year basis.
- International Investment Position: data compiled as at March 31 each year until March 31, 1999. From March 31, 2000, data are available quarterly.
- National Accounts: Source: Statistics New Zealand. Lines 99a.c and 99b.c include a statistical discrepancy. From 1987 onwards data have been revised according to the 2008 SNA.

*Appendix I. IFS Country Notes for New Zealand*

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_Source: https://www.imf.org/-/media/files/publications/cr/2019/1nzlea2019001.pdf_