Uma Venkatram –
Guests at the Sixth Annual Indian Newslink Sir Anand Satyanand Lecture had a unique opportunity to understand the working of the Reserve Bank of New Zealand on Monday, July 25, 2016.
Governor Graeme Wheeler explained the policies and procedures which form the founding ideals of New Zealand’s Central Bank and provided an insight into the various mechanisms employed to keep inflation under control and foster economic growth.
New Zealand is regarded for its transparency and disclosure regime, and is currently ranked fourth in the Corruption Perception Index (CPI) with acknowledgement in the banking and financial sector worldwide.
Core Principles
In a dynamic world of constant challenges such as the US sub-prime market collapse, global financial crisis and build-up of credit risk in Chinese market, RBNZ has adopted sound governance and institutional measures to stabilise and steer the New Zealand economy. Its regulatory framework is guided by transparency, accountability and corporate responsibility.
We heard that the Bank has used foresight to implement banking and financial regulations in the face of externalities and information asymmetry.
Its policy is based on solid anchors of self-discipline, market discipline and regulatory framework. The Bank considers that not every market failure needs a regulatory response.
Managing Risks
Self-discipline comprises, amongst others, internal risk management, Board composition, diversity, minimum number, participation, rotation and calibre of senior management.
Market discipline entails credit-rating and various disclosure and reporting requirements, whilst the last anchor – regulatory framework – covers the role of RBNZ as a regulator and encompasses issues such as risk appetite and levels of capital and liquidity.
The Bank guides the New Zealand financial system using appropriate tools for issues such as raising bank capital, bank management, financial stability, insurance reforms and liquidity measures.
The Bank is guided by international committees in the finance and insurance sectors.
It follows overseas developments closely and keeps a constant watch on the local economy, learning from past failures such as the collapse of the 50 finance companies in the past years.
Wide-ranging issues
The Lecture was followed by a lively Question and Answer session which covered a number of economic and financial developments in New Zealand, such as prices and macro-prudential policy on Loan to Value Ratios, to the Indian economy and not to mention Bhutan’s Gross National Happiness Index.
Professor Sekhar Bandyopadhyay was the Master of Ceremonies and Business Journalist Rod Oram was the Summation Speaker.
BNZ was the Title Sponsor of this Lecture with Barfoot & Thompson, Relianz Travel and Radio Tarana as other sponsors.
Uma Venkatram is a professionally qualified Chartered Accountant and a Member of the Chartered Accountants Australia New Zealand (CA ANZ). Reports and analyses are among her passions.
Photo:
- Sir Anand and Lady Susan Satyanand and Graeme Wheeler with special guests at the Lecture.
- Reserve Bank of New Zealand Graeme Wheeler speaking at the Sixth Annual Indian Newslink Sir Anand Satyanand Lecture at Pullman Hotel Auckland on Monday, July 25, 2016.
