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  1. #111
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    I suppose someone has to pay the premiums, not sure how it works to be honest. If it is a national scheme then depositors across all banks will pay to help out those in crappy banks that fall over reducing premium costs. Still better than taxpayers bailing them out, insurance also takes the smaller depositor out of the picture in a crisis as insurance will have them covered and the govt may not feel the need to bail the banks out.

    No one is talking about how the current economic system is trying to generate inflation to reduce over-indebtedness by stealing from depositors through inflation. It is an outrage but no one seems to be talking about it. I guess I am a dummy thinking targeted inflation, protecting borrowers at the expense of savers, negative interest rates etc etc is nonsensical. I will be broke before central banks do the right thing and let markets decide interest rates and stop propping up asset prices with easy money and low interest rates.

    I too would be less inclined to agree with Adrian Orr if I owned Aussie bank shares. Not sure about Kiwisaver ownership in general. My Kiwisaver fund doesn't own any as I switched to as close to cash as possible some time ago (so hoping banks don't go under). That is why central bank intervention propping up asset prices is making me so mad. Self interest as always, also I think it is exacerbating inequality and not giving the next generation the same chances that we had to secure our financial future.
    I don't understand the US repo market but basically banks were asking for higher interest rates to reflect risk so the federal reserve comes in to suppress them. Total bull****. Money is worthless in the current environment so I take my chances that we have a market crash prior to people losing confidence in Money. Looking at the NZ govts debt level if there is a crisis of confidence in money the $NZ should appreciate significantly although if commodity prices drop at the same time who knows.

  2. #112
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    Out of idle curiosity, does the RBNZ run stress tests on the banks registered in New Zealand?

    I seem to recall that some were done a couple(?) of years ago, but I've heard nothing since.

    Perhaps there's been another round and some banks failed?

  3. #113
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    Quote Originally Posted by GTM 3442 View Post
    Out of idle curiosity, does the RBNZ run stress tests on the banks registered in New Zealand?

    I seem to recall that some were done a couple(?) of years ago, but I've heard nothing since.

    Perhaps there's been another round and some banks failed?
    I read an article saying they do. The writer was therefore a bit bemused by this tinkering, because the banks had been passing them. He wondered whether the RBNZ sees something more calamitous than is already factored into their models. Those models contained extreme scenarios around house prices and dairy payouts along with a bunch of other stuff.

  4. #114
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    RBNZ's latest stress test was in 2017. See Post 106 above.

  5. #115
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    We (some) seem to have upset our Adrian

    What a weird statement - sometimes it best just to shut up

    Acting with integrity - for all New Zealanders

    Release date11 October 2019
    Statement from the Reserve Bank of New Zealand’s Senior Leadership Team

    Leading the people at the Reserve Bank of New Zealand is an absolute privilege, and we never take that for granted. We are surrounded by incredibly clever and dedicated people who are driven by the shared values we have at Te Pūtea Matua: inclusion, integrity, and innovation.

    Every day we come to work with the same ambition and drive – to serve all New Zealanders so they can live their lives with prosperity and the reassurance that the financial system we regulate remains stable and productive. To do that we need to have the brightest and best people who come from all sorts of backgrounds with a wealth of experience, wisdom and knowledge.

    We are immensely proud of our workforce and the contribution they make – we make no bones about that.

    Sometimes we make difficult decisions that are unpalatable for a few, but we do that with the many in mind. We are not looking to win votes or accolades – we do what’s right for the good of all New Zealanders for today, tomorrow and for generations to come.

    As global economic environments throw challenges at central banks, more than ever we need to be innovative and the best way we can do that is to ensure we have diverse and fresh thinking in our midst. That’s the smart thing to do.

    We’ll continue to have informed and mature conversations on the remit we hold on behalf of Aotearoa.

    We’ve charted our course, prepared for whatever is on the horizon and will weather the storms. New Zealanders can depend on that.

    This is the only statement we will be making on the recent remarks about the capabilities of our people.

    The Reserve Bank of New Zealand’s Senior Leadership Team

    https://www.rbnz.govt.nz/news/2019/1...new-zealanders
    Last edited by winner69; 12-10-2019 at 03:23 PM.
    . To say extreme valuations are “justified” is also to say that long-term market losses are “justified.” .

  6. #116
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    How bizarre! And prickly! As I have read it, the recent commentary has been about the people leaving, not the capabilities of the people staying.

  7. #117
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    I believe there is a problem to solve with banks whereby the government should attempt to ensure that it doesnt have to bail them out. Technically it doesnt have to of course but we all assume it would, and history confirms such behaviour. I'm not really a fan of Deposit Inurance however I think I do have to concede that the larger trading banks rely on an implicit govt guarantee and hence charging insurance is fair
    I think some formula should be applied using number of years paying this insurance premium to calculate minimum capital ratio with limits on how low it can go. After 10 year of payments
    (without claiming)
    then, you can have say a capital ratio at todays levels or higher. Otherwise its at some high level up towards Orrs figures.
    For clarity, nothing I say is advice....

  8. #118
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    How do they get on in the Channel Islands?

    They make much of their "guarantee", but from what I have managed to figure out, the fund backing it is only about GBP100m. Which kind of indicates that it's not all that much of a scheme, given the size of the banking system there.

    But I may well have this wrong - I have no money there so have put little time into it.

  9. #119
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    Reddell concerned about Orr’s behaviour and writing to the Board and to Robertson.

    Reddell might be just be grumpy but he could well be doing a good thing for the people of Aotearoa.

    https://croakingcassandra.com/2019/1...board-members/
    . To say extreme valuations are “justified” is also to say that long-term market losses are “justified.” .

  10. #120
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    yeh I've been reading Reddell lately and he sure has an axe to grind about Orr.
    I guess technically he (Redell) is right in that Orr is operating both unuseally for a RB governor but perhaps more importantly outside the RBNZ's mandate.
    For all his wordiness Redell is quite factual and isnt adverse to being shown the numbers that prove high capital ratios for banks would be beneficial but Orr is not providing these.
    For clarity, nothing I say is advice....

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