Quote Originally Posted by macduffy View Post
If the RBNZ wasn't setting interest rates, what are these "market (interest) rates?
I guess I would need to understand international finance better and the nature of money in a fiat currency system.

If banks and finance companies are the market place for interest rates we did see finance companies successfully attract capital through higher interest rates (and back handers to "financial advisors") although obviously the risk assessment by the lenders of the capital was not very good.

How are NZ banks funded as the article below points out the more banks lend the more money gets created. Do banks even need depositors? I read of central banks printing money and buying bonds, does this fund banks in NZ.

The OCR influences all other interest rates, but how if banks are free to set rates however they like how does it do this.