New Zealand central bank warns of risks to financial system amid global volatility
WELLINGTON, May 7 (Reuters) - New Zealand's central bank said on Wednesday that risks to the financial system had increased over the past six months as the global economic environment becomes more volatile, but said the country's banks remain in a strong position.
Geopolitical risks have escalated following U.S. tariffs on goods imports from many countries, including New Zealand, Reserve Bank of New Zealand (RBNZ) Governor Christian Hawkesby said in the Financial Stability Report.
These developments have heightened financial market volatility and pose a material risk to global economic activity, the report said.
'While the global economic environment has become more volatile, our financial institutions are in a strong position to support the economy,' Hawkesby said.
The statement said banks have strong capital and liquidity buffers in place to maintain credit flows even if conditions deteriorate further. They also remain profitable, with non-performing loans expected to decline as mortgage rates reprice lower.
While New Zealand moved out of recession in the fourth quarter of last year, the economy remains soft and sentiment weak. Data due to be released later on Wednesday is expected to show that unemployment has risen to 5.3%.
The central bank said domestically, economic activity remains subdued as previously high interest rates, rising unemployment and a weak housing market continue to weigh on demand.
'However, lower borrowing costs and high agricultural export prices are supporting debt serviceability,' it added.
The RBNZ has cut the cash rate by 200 basis points since August last year to 3.5% as it tried to prop up the economy and is expected to cut further this year.
The central bank said that geopolitical risks have escalated, particularly following the United States' imposition of sweeping tariffs on goods imports from many countries, including New Zealand.
'These developments have heightened financial market volatility and pose a material risk to global economic activity,' it said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Finextra
9 hours ago
- Finextra
Payments NZ declares beginning of new era for open banking
We've reached a major milestone for open banking in Aotearoa New Zealand. Today, the four largest banks – ANZ, ASB, BNZ, and Westpac NZ – are due to implement version 2.3 of our Payment Initiation API standard. 0 It's the third milestone in our Minimum Open Banking Implementation Plan and a pivotal moment in the evolution of a more connected, consumer-empowered financial ecosystem. This upgraded standard has been developed in close partnership with banks, fintechs, and broader ecosystem stakeholders. It introduces enduring payment consent and decoupled authentication - functionality that's been high on the priority list for third parties and developers. These features not only provide new flexibility for customers, but set a higher bar for what's possible in digital payments. As Phil Cass, our API Centre Manager, puts it: 'Enduring payment consent fundamentally changes the landscape. It brings us closer to a secure, transparent alternative to direct debit - giving consumers greater visibility and control. This milestone proves what industry collaboration can achieve, especially when it's anchored in strong technical foundations and trust.' Kiwibank is also on track to implement the same standard by May 2026, ensuring broad coverage and consistency across the major retail banks. This achievement comes just weeks after the Customer and Product Data Act 2025 came into force, and we're committed to working with MBIE to achieve a sustainable open banking ecosystem that finds the right balance between regulation and ongoing industry leadership. Growing together: our expanding ecosystem The momentum doesn't stop with implementation. Our community is growing - we now have 7 API Providers, 27 Third Parties, and more than 500 Community Contributors. Already this year, we've welcomed several new third parties into the fold. Our four cross-industry working groups - Business, Technical, Accreditation & Partnering, and Customer & Safety - are contributing hundreds of hours of combined expertise, co-designing the future of open banking in Aotearoa. A key piece of this is our Partnering Framework. Authorised by the Commerce Commission in August 2024, this initiative is focused on making it easier and faster for third parties to establish partnerships with banks. Together with 19 Standards User organisations, we've been defining fit-for-purpose accreditation criteria, classes, and risk settings that ensure both safety and ease of access. Data handling guidelines The API Centre has partnered with Māori data scientists from Nicholson Consulting - world leaders in indigenous data sovereignty - to develop best practice guidelines for data handling, grounded in the Māori Data Governance principles and framework. Our data handling guidelines provide a universal framework that supports all users, including Third Parties and permitted users, to align their data practices with broader principles of good data governance. We look forward to publishing the guidelines in mid-June. What's next? This year we're also delivering a performance standard to ensure consistent availability, service quality, and outage management. Our new customer experience guidelines are already live, offering safer, more intuitive pathways for customer interaction, including for intermediary journeys. Consultation is imminent on version 3.0 of our standards and we will continue to support implementation of version 2.3 of the Account Information API across the major banks, expected by 28 November. And of course, we're looking forward to celebrating six years of the API Centre with The Hub | Pulse event in mid-June. We'll be reflecting on the incredible progress we've made together, while looking ahead to the next phase of industry-led open banking in a regulated world. Open banking is here. Customers are using it. And together, we're just getting started.
Telegraph
2 days ago
- Telegraph
What Britain can learn from New Zealand, a pioneer in ‘post-woke' economics
It has just reversed its ban on oil and gas exploration. It has liberalised its mining laws, sparking a boom in mineral production. And it has even scrapped a planned ban on smoking to help generate tax revenues for tax cuts elsewhere. Ever since Christopher Luxon replaced the liberal-Left hero Jacinda Ardern as prime minister of New Zealand, the country has been setting an example for what a 'post-woke' economy looks like. It has started unwinding many of the key policies championed by the Left – and if it works it will set a powerful template for the UK and many other countries to follow. New Zealand's economic policies have started to shift dramatically since Ardern left office. In its latest budget this month, the government confirmed plans to invest in new offshore gas fields, with subsidies on offer to attract global companies into the sector. It reversed the ban on new developments imposed by Ardern's government, despite the discovery of huge new fields in the country's territorial waters, and maintained in the face of soaring power prices and potential blackouts as the country ran short of electricity. 'The government is not prepared to sit on the sidelines and watch our industrial and manufacturing [base] dwindle because of energy security concerns,' argued Shane Jones, New Zealand's resources minister, in a defence of the change in policy. It does not stop there. New Zealand has announced plans to double mineral exports to NZ$3bn (£1.3bn) over the next decade, adding both gold and coal to the critical minerals list for the national economy and brushing aside many of the environmental concerns that have restricted development of natural resources over the past decade. Likewise, Luxon's centre-Right government has scrapped the generational smoking ban, a policy copied by Rishi Sunak, which would have steadily abolished tobacco by age group. The reason? The government agrees, as we all do, that smoking is very bad for people, but it wants to maintain all the revenue tobacco generates to allow taxes to be cut elsewhere. Indeed, there have already been extra tax breaks for businesses in the 2025 budget and the planned digital services tax has been scrapped. Add it all up and one point is clear: New Zealand is providing a template for what might be termed the post-woke economy. It is not doing anything that is especially Right-wing, or libertarian, by any reasonable historical standards. Its policies would have been standard centrism during the 1990s. Tony Blair or Gordon Brown would have been quite happy with any of them. But it is ditching a lot of the liberal baggage that prioritised virtue-signalling over economic growth. It is allowing domestic fossil fuel production to be expanded until renewables come on stream. This is unlike the UK, which is running down its North Sea oil and gas industry even as we have to import more and more energy from abroad, and the soaring price of industrial electricity lays waste to what remains of our industrial base. New Zealand is allowing mining to be expanded, recognising that, so long as China needs lots of raw materials, it might as well supply them rather than leaving the market to its rivals. And it is rolling back the nanny state, while steadily cutting taxes for both businesses and individuals, while at the same time not running up huge deficits or testing the patience of the bond markets. Will it work? Under Ardern, New Zealand's output stagnated as public spending exploded, rising by almost 50pc under her premiership, while debt as a percentage of GDP rose from 28pc in 2018 to 46pc by 2024 (admittedly still a miraculously low figure by European or American standards). It is still early days, and the reforms will take time to work, but the early signs are encouraging. The economy is expected to expand by 1.4pc in 2025, a lot better than anything the UK is likely to manage. As extra oil and gas comes on stream and the mining industry expands, we can expect that to accelerate. The country has been here before. In the 1980s New Zealand pushed through a series of free market reforms that became known as Rogernomics after Roger Douglas, the radical, liberal finance minister. They included floating the NZ dollar, abolishing exchange controls, privatising industries such as airlines and the post office and abolishing farming subsidies, a far bigger deal than in most other countries given the size and importance of its agricultural sector. That powered a decade or more of strong growth. Perhaps just as importantly, it set a template for the Thatcher and Reagan reforms on a bigger stage later in the decade. New Zealand was a laboratory for fresh ideas and when they worked other countries started to copy them. The UK, and indeed the rest of Europe, should take a look at what is happening on the other side of the world all over again. It doesn't make any sense to run down fossil fuels until renewables are as reliable and competitively priced. We will still need to mine for raw materials, and that can be done in a way that is compatible with preserving the environment. We can't keep banning everything we don't approve of without destroying the tax base and making the state too powerful. If New Zealand can get to the 2 or 3pc annual growth rates that now seem completely impossible in most of the developed world, policymakers as well as voters will have to take notice. In the 2020s perhaps New Zealand can show us all what the post-woke economy will look like. After all, the world certainly needs a very different model than the doom loop of stagnant growth and permanently rising taxes it is trapped in right now.
Reuters
3 days ago
- Reuters
Hurricanes shatter Moana dreams and send Blues into Super Rugby playoffs
SYDNEY, May 31 (Reuters) - The Wellington Hurricanes shattered Moana Pasifika's dreams of a maiden Super Rugby Pacific playoff campaign with a crushing 64-12 victory on Saturday that sent the defending champion Auckland Blues into next week's quarter-finals instead. The Hurricanes cemented fourth place in the final standings and will travel to Canberra next Saturday to play the ACT Brumbies, while the Blues, who earlier beat the New South Wales Waratahs 46-6, will visit the table-topping Waikato Chiefs. In the other opening-round playoff, the 12-times champion Canterbury Crusaders will host the Queensland Reds, who conclude the regular season fixtures when they take on the Fijian Drua in Brisbane later on Saturday. Moana had hoped to be there too on the back of a breakout season but even redoubtable skipper Ardie Savea was unable to inspire them to the bonus-point victory they needed to edge out the Blues and claim the sixth and last playoff spot. Number eight Semisi Tupou Ta'eiloa gave Moana the perfect start at Wellington Stadium with a try after six minutes but Hurricanes were 14-7 up before a quarter of an hour had expired. Hooker Jacob Devery went over on the back of a rolling maul before flanker Devan Flanders showed his footballing skills with a chip and chase for the second try. Savea grabbed a couple of turnovers but it only delayed the inevitable as Hurricanes scrumhalf Cam Roigard went over from an intercept and centre Peter Umaga-Jensen rampaged through the Moana defence to give the home side a 28-7 halftime lead. Umaga-Jensen barged over for his second try 10 minutes after the break before Raymond Tuputupu, Pouri Rakete-Stones, Billy Proctor, Ereatara Enari and Tjay Clarke completed the 10-try rout. "Really pleasing, not only that we got the result, but that we played the way we did going into the finals," said Hurricanes co-captain Du'Plessis Kirifi. "From next week on, you've got to just start again. Start again and go hard." Savea, who scored a consolation try against his old team in the 65th minute off a catch-and-drive, expressed his pride in what Moana had achieved this year. "We're not satisfied," he said. "Our goal was to win the thing and make top six, but that wasn't meant to be." The Blues earlier ended the slender post-season hopes of the Waratahs by running in seven tries in a bonus-point victory at Eden Park to extend their winning streak over the Sydney-based club to 11 matches. Centre Rieko Ioane scored a hat-trick and winger Mark Tele'a two tries on the back of an attack skilfully marshalled by their fellow All Black Beauden Barrett as the Blues gave the Waratahs a lesson in clinical finishing. "We just wanted to play shackle-free and have some fun and I think we did that tonight," said Ioane, who joined Doug Howlett as the Blues' all time leading try-scorer with 55. "We knew how crucial the bonus point was, and to hold them to no tries was awesome." On Friday, the Chiefs locked up top spot in the standings and home advantage throughout the playoffs with a 41-21 victory over the Otago Highlanders and the Crusaders beat the Brumbies 33-31 to win the shootout for second.
