The Reserve Bank (RBNZ) has given a vote of confidence in the strength of New Zealand banks and their ability to cope with any financial crisis.
In a tweet the central bank said it had been monitoring overseas events that have struck three US banks, and the Swiss giant Credit Suisse.
We are aware of the current financial stability issues with a small number of banks internationally. We are monitoring the situation closely, and are in regular contact with other regional regulators and regulated entities.
“We are confident that the banks we are responsible for supervising have sound liquidity and funding positions,” the RBNZ tweet said.
“In New Zealand all registered banks are required to have systems in place to monitor and control their material risks, and this includes interest rate risks.
The RBNZ said recent stress testing of New Zealand banks showed them to be “well-placed to deal with far more adverse situations than what we are currently experiencing”.
New Zealand registered banks are tested annually against a range of scenarios that simulate severe pressure on their finances.
The most recent one included falls in house prices, a rise in unemployment, high interest rates and sliding share markets, although did not include a possible run on the bank by depositors to get their money out.
The RBNZ is requiring banks to increase the amount of capital they hold to guard against financial crises.
Credit: radionz.co.nz
