RBNZ balance sheet almost triples in size
In a speech published today, the bank's head of financial markets Vanessa Rayner says the size and composition of the Reserve Bank’s balance sheet had changed significantly in response to the Covid-19 pandemic.
Reflecting the improvement in financial market conditions, some of the liquidity facilities introduced by the Reserve Bank to keep cash flowing through the banking system were removed earlier this year.
“The removal of these temporary liquidity facilities should be taken as a sign of the collective success of the actions taken by global central banks as well as the resilience of commercial banks’ liquidity and funding positions prior to Covid-19,” Rayner says.
The actions taken over the past year mean the bank’s balance sheet will remain large for a long time, and new monetary policy tools will likely remain mainstream for as long as global central bank policy rates remain at, or near, record lows.
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