Crisis Preparedness in the Digital World

This paper discusses the importance of crisis preparedness and the role of financial supervision in mitigating the risks posed by technological innovations in the financial ecosystem. The paper will focus on the important role that financial supervisors and regulators can play in promoting effective risk management, supervision and crisis preparedness in relation to fintech developments, and the need for coordination and collaboration with policymakers, government, and the financial sector to address potential threats to financial stability. It elaborates on the challenges associated with fintech developments in banking and the potential implications for financial supervision and considers the nature of crisis preparedness in the context of banking in the digital era. The paper also provides thoughts on the tools available to supervisory authorities and central banks in dealing with financial crises while enabling new technologies to enhance financial services provisions

An Assessment of the Causes of Financial Instability and Possible Policy Solutions

This paper provides an excellent summary of the main issues relating to financial stability and offers some suggestions on the policies that can be adopted to reduce the potential for systemic instability. It explains why financial stability is important to the economy and why governments need to attach high priority to the promotion of financial stability. It also shows how instability could be traced to the structural features of financial systems. The paper concludes with some recommendations on the policies required to promote a robust financial system.

Reforms to global financial architecture

In recent years, and particularly since the Asian crisis of 1997/98, much international attention has been directed at proposals to reform aspects of the international financial system - the so-called "global financial architecture". This article outlines the concerns underlying the international financial reform proposals and summarises their key objectives and elements.

Musings on financial stability issues: an interview with Professor George Kaufman

Professor George Kaufman, the John F Smith Professor of Finance and Economics at Loyola University in Chicago, spent time at the Reserve Bank of New Zealand earlier this year while a Professorial Fellow in Monetary and Financial Economics at Victoria University of Wellington, funded by the Reserve Bank under its visiting academic sponsorship programme. While at the Reserve Bank, Professor Kaufman worked on a range of issues relating to financial stability, focusing in particular on options for dealing with bank distress and failure situations. In that context, the Editor of the Bulletin interviewed Professor Kaufman on a range of financial stability issues. This interview represents an edited version of the interview held with Professor Kaufman and has been approved by him for publication in the Bulletin. The views expressed in this interview are those of Professor Kaufman and do not necessarily represent the views of the Reserve Bank.

Summary of a new Reserve Bank of New Zealand paper: Overview of New Zealand financial sector regulation

In the March 2003 issue of the Bulletin, we ran an article explaining the Financial Sector Assessment Programme (FSAP) and noted that New Zealand will be undergoing an FSAP assessment later this year. The FSAP assessment will take place in October and November this year and will involve a team of foreign officials, led by the International Monetary Fund, assessing various aspects of New Zealand's financial system. This will include an evaluation of much of the financial sector regulatory framework, particularly banking supervision and securities market regulation.

Banking supervision: placing a new emphasis on the role of bank directors

An outline of the responsibilities of registered banks' directors in the context of banking supervision

New disclosure regime for registered banks

An outline of new public disclosure requirements for registered banks

New Zealand's financial sector regulation

This article provides a summary of the regulatory framework in the New Zealand financial sector. It describes the core components of the financial system, including the financial institutions and financial markets, and explains the infrastructure required to support the system. The article then discusses the main aspects of the regulatory framework of the financial system, particularly banking supervision and securities market regulation.

Strengthening market disciplines in the financial sector

This article discusses the role of market disciplines in the financial sector. It is a slightly amended version of a paper prepared recently under the auspices of the APEC Finance Ministers' forum, summarising the key points to emerge from an APEC conference on market disciplines and the role they can play in promoting financial stability. Market disciplines are an important element in promoting sound and efficient financial systems. In a well-functioning market, financial institutions with poorly developed risk management structures tend to be penalised by the market through higher funding costs, while those with prudent risk management structures tend to be rewarded. In the longer term, weaker financial institutions will be weeded from the system, leading to a healthier and more dynamic financial system that is better able to meet the needs of the wider economy. Unfortunately, many government interventions and policies tend to impede the effectiveness of market disciplines, such as widespread government ownership of banks, government guarantees of bank deposits, a presumption that insolvent banks will be rescued by the government, and poorly functioning financial markets. Weak market disciplines have been a major cause of financial crises in recent years in many countries, resulting in severe economic and social costs. This article discusses these issues and assesses the types of policies required to strengthen market disciplines. It also discusses the need to strike a sensible balance between promoting effective market disciplines on the one hand, while seeking to avoid the dangers associated with market over -reaction or extreme market volatility, on the other.