Wellington - Banks in Australasia are well placed to handle the current international financial crisis, Alan Bollard, governor of the Reserve Bank of New Zealand, said on Wednesday. "While we are far from seeing the final impact of the financial and economic disruption, New Zealand's banks, and the Australian parents of the majors, are well-positioned to withstand the economic downturn," Bollard said while releasing the bank's November financial stability report.
He said New Zealand's banks had not experienced the significant losses affecting financial institutions in the United States and Europe and had sufficient capital buffers to withstand the higher loan losses that would inevitably result from the downturn.
Bollard said recent global market conditions had, however, affected the cost and accessibility of offshore funding that New Zealand banks and the country had relied on heavily.
He said that measures undertaken by central banks and governments around the world had improved market conditions in recent weeks and New Zealand had adopted a range of policy measures to help reduce financial and economic risks.
Deputy Governor Grant Spencer said a retail deposit guarantee scheme that the government announced in October assured New Zealanders that their deposits were safe.
A wholesale guarantee scheme announced early this month was aimed at facilitating the re-entry of financial institutions to offshore wholesale debt markets.
"These schemes are a temporary response to exceptional circumstances," Spencer said.
Calling global developments "extremely disruptive", Bollard said it would be some time before financial market conditions normalized.
"The bank will continue to adopt measures as needed to maintain the stability of our financial system as far as possible in these difficult times," he said.
