English warns of local economic fallout from EU turmoil

New Zealand banks could suffer disruption if the EU financial crisis deepens, Finance Minister Bill English warned today.

“There is…the possibility that the financial markets in which the New Zealand Government and New Zealand banks borrow could be disrupted at times,” Mr English told the House.

The comments were in response to what was clearly a planted question from National backbencher, Maungakiekie MP Sam Lotu-Iiga.

A default by Greece – which economists are predicting as more likely day-by-day – would have a cascading effect.

“The resulting losses would affect the soundness of European banks and possibly send Europe back into recession. Europe still accounts for 13 percent of our merchandise exports, so any economic weakness in Europe is not good news for New Zealand.”

New Zealand banks are better funded, with more stable, longer-term deposits, than they had in 2008 and they are less dependent on the 90 Day “hot money”.

Uncertainty from the global financial conniptions – especially that of Europe –has already pushed up wholesale funding costs for New Zealand banks, as the National Business Review reported a month ago.

However the banks are less vulnerable than they were, Mr English said.

“There has been concerted action since the 2008 financial crisis to reduce New Zealand’s vulnerability to the financial markets in which we borrow. The Reserve Bank has ensured that our banks are in a sounder position now than they were then.”

This article is tagged with the following keywords. Find out more about My Tags

Post Comment

6 Comments & Questions

Commenter icon key: Subscriber Verified

...and the chorus for "single currency salvation and we'll wipe all debt" chimes in...

Reply
Share

People have to start waking up and understanding these crashes are engineered. If we comply with these problem-reaction-solution scenarios it would be our undoing.

Reply
Share

While our banks operate ponzi style undertakings, they of course will be vulnerable

Reply
Share

yet another convenient excuse to cover up govt's lack of a cohesive plan to move the economy forward?
liberte

Reply
Share

Another excuse for the banks to charge a higher margin

We are still being charged the additional funding cost of the banks 4 years ago after the GFC which the banks have stopped paying two years ago. Why doesn't Bill English have the balls to tell the banks that they can't add another margin if greece fails and maybe also give some back to their customers

Harden up Bill and look after the whole economy - not just your mates

Reply
Share

"No shit, Sherlock"

Reply
Share

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7740 -0.0003 -0.04%
AUD 0.9511 0.0005 0.05%
EUR 0.6324 -0.0002 -0.03%
GBP 0.4954 0.0001 0.02%
HKD 6.0039 0.0001 0.00%
JPY 92.5100 -0.0050 -0.01%

Commods

Commodity Price Change Time
Gold Index 1195.4 -2.890 2014-12-19T00:
Oil Brent 61.4 1.580 2014-12-19T00:
Oil Nymex 57.1 2.910 2014-12-19T00:
Silver Index 16.0 0.096 2014-12-19T00:

Indices

Symbol Open High Last %
NZX 50 5518.5 5545.0 5539.3 -0.21%
NASDAQ 4752.6 4782.1 4748.4 0.36%
DAX 9901.3 9901.3 9811.1 -0.25%
DJI 17778.0 17874.0 17778.2 0.15%
FTSE 6466.0 6566.9 6466.0 1.23%
HKSE 23158.3 23189.6 22832.2 1.25%
NI225 17511.0 17621.4 17210.0 2.39%