RBNZ Orr says a significant part of the economic challenge still ahead and he sees more room for banks to increase lending.
The Reserve Bank of New Zealand (RBNZ) Financial Stability Report is out as follows:
RBNZ Financial Stability Report
- Says the financial system will benefit supporting economic recovery.
- Says the financial system is in a solid position to both weather the significant economic impact caused by the COVID-19.
- Says working on a number of initiatives to support the flow of lending and functioning of the financial system.
- Says continuing to work with insurers to see them maintain a strong focus on long-term customer outcomes.
- Says outside of the banking system, some parts of the financial system entered the downturn in a vulnerable position.
- Says economic stress test analysis suggest banks can continue to lend and prosper through a broad range of adverse scenarios.
- Says wage subsidies and easier monetary policy have cushioned the near-term financial impact.
NZD/USD has been one of the best performers, capitalising on the weakness on the USD and risk-on markets.
The description of the Financial Stability Report
The Financial Stability Report, released by Reserve Bank of New Zealand, is published six-monthly. In the Financial Stability Report we assess and report on the soundness and efficiency of the New Zealand financial system.
Analysts at ANZ Bank explained, "there’s plenty to be worried about at the moment, and financial stability concerns have been a core part of the RBNZ’s policy response to COVID-19."
In the Financial Stability Report out today, the RBNZ highlighted the resilience of the New Zealand banking system and its role in supporting the economy. But risks abound, and job losses and loan losses are unfortunately inevitable.
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