RBNZ: Financial System Resilient Amid Worsening Global Outlook

New Zealand’s financial system remains resilient despite a worsening global risk outlook, Reserve Bank of New Zealand Governor Anna Breman said in a statement in its Financial Stability Report published on Wednesday. “It is well-positioned to support households and businesses even if economic conditions soften,” she said. However, she noted that risks to global financial stability have increased the longer the conflict in the Middle East goes on, and that it is already having significant economic effects in New Zealand. “While economic growth had been recovering before the conflict, we are now likely to see a somewhat slower recovery, affecting job growth and debt servicing,” she said. Meanwhile, banks have strong capital and funding buffers and are therefore well placed to support customers who may be struggling and manage stress in offshore funding markets. The report noted that stress tests have shown banks can withstand significant economic shocks.