{
  "title": "New Zealand: Financial Sector Assessment Program: Financial System Stability Assessment",
  "publication": "IMF Staff Country Reports, May 8, 2017",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2017/05/08/new-zealand-financial-sector-assessment-program-financial-system-stability-assessment-44886",
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  "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.",
  "publishDate": "2017-05-08",
  "series": "IMF Staff Country Reports",
  "sections": [
    {
      "heading": "Summary assessment",
      "content": "- This paper presents an assessment of the stability of the financial system in New Zealand.\n- 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.\n- Despite these vulnerabilities, the banking system is resilient to severe shocks.\n- Strengthening the macroprudential framework is important."
    },
    {
      "heading": "Key macro-financial vulnerabilities",
      "content": "- Imbalances in the housing market.\n- Banks’ concentrated exposures to the dairy sector.\n- High reliance on wholesale offshore funding.\n- 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."
    },
    {
      "heading": "Banking sector characteristics and exposures",
      "content": "- The banking sector has significant exposure to real estate and agriculture.\n- The sector is relatively dependent on foreign funding.\n- The banking sector is dominated by four Australian subsidiaries."
    },
    {
      "heading": "Stress testing, resilience, and scenarios",
      "content": "- The assessment finds the banking system is resilient to severe shocks.\n- Adverse scenarios identified that would materially affect the system:\n  - Sharp decline in the real estate market.\n  - Reversal of the recent recovery in dairy prices.\n  - Deterioration in global economic conditions.\n  - Tightening in financial markets."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Strengthen the macroprudential framework to address identified vulnerabilities.\n- Monitor and mitigate risks from concentrated sectoral exposures (real estate and dairy).\n- Reduce reliance on wholesale offshore funding and address external funding vulnerabilities.\n- Continue stress-testing and contingency planning for scenarios involving market tightening and global deterioration.\n\nInternational Monetary Fund. Monetary and Capital Markets Department \"New Zealand: Financial Sector Assessment Program: Financial System Stability Assessment\", IMF Staff Country Reports 2017, 110 (2017), accessed 9/22/2026, https://doi.org/10.5089/9781475598834.002\n\n---\n\n Content in this bundle\n\n- Country Report\n  - Country Report (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Country Report (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/cr/issues/2017/05/08/new-zealand-financial-sector-assessment-program-financial-system-stability-assessment-44886"
    }
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    "Published: May 8, 2017",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781475598834.002",
    "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.",
    "Despite these vulnerabilities, the banking system is resilient to severe shocks.",
    "Strengthening the macroprudential framework is important.",
    "Imbalances in the housing market.",
    "Banks’ concentrated exposures to the dairy sector.",
    "High reliance on wholesale offshore funding.",
    "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.",
    "The banking sector has significant exposure to real estate and agriculture.",
    "The sector is relatively dependent on foreign funding.",
    "The banking sector is dominated by four Australian subsidiaries.",
    "The assessment finds the banking system is resilient to severe shocks.",
    "Adverse scenarios identified that would materially affect the system:",
    "Strengthen the macroprudential framework to address identified vulnerabilities.",
    "Monitor and mitigate risks from concentrated sectoral exposures (real estate and dairy).",
    "Reduce reliance on wholesale offshore funding and address external funding vulnerabilities.",
    "Continue stress-testing and contingency planning for scenarios involving market tightening and global deterioration.",
    "**Country Report**"
  ],
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