RBNZ's Bascand expects ‘some time' before full economic recovery.
- Time for banks to drawdown prudently on buffers to support customers.
- Shareholders will have to be patient for longer-term payoffs.
- Banking sector must confront long-term low interest rates.
The COVID-19 health crisis has posed significant challenges for the New Zealand economy and financial system and we expect it will take some time before we see a full recovery. The immediate operational challenges for the financial sector have been successfully overcome and the system has proved resilient so far, in part resulting from a stronger regulatory framework and favourable economic conditions over the past decade.
As we gradually move past the challenges currently facing the banking sector, we expect issues such as alternative monetary policy, accelerating digitisation and new competitive challenges will shape the banking sector in the years to come.
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