By Paul McBeth
Wednesday 12th November 2008 |
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“New Zealand’s banks, and the Australian parents of the majors, are well-positioned to withstand the economic downturn,” said Governor Alan Bollard in a statement today. New Zealand’s financial systems “have held up well in the face of extreme disorder within the international financial markets.”
New Zealand’s banks haven’t experienced the major losses seen in the US and Europe, with less exposure to toxic, mortgage-related securities such as collateralized debt obligations. Still, the central bank has negotiated access to a US$15 billion credit swap line with the Federal Reserve ensuring the availability of cash reserves, while widening the range of securities it will accept as collateral.
Bollard said access to credit is a key risk facing New Zealand, as the nation relies heavily on offshore funding. Over US$1.5 trillion has been spent by the Chinese, American and German governments as they move to shore up the financial sector since the collapse of Wall Street giants Lehman Brothers and Bear Stearns.
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