Reserve Bank of New Zealand Governor Alan Bollard admits it is a risk writing about the global financial crisis while he is still in office and events are still unfolding.But the process of creating his book, Crisis: One Central Bank Governor and the Glob
Reserve Bank of New Zealand Governor Alan Bollard admits it is a risk writing about the global financial crisis while he is still in office and events are still unfolding.
But the process of creating his book, Crisis: One Central Bank Governor and the Global Financial Collapse, and oral history recordings that triggered were cathartic. They clarified "the fog of war" and how he felt about the biggest challenge of his career, he said.
"It was quite unusual and I had to think about it carefully. There were a few things I couldn't say," he said.
It is an account that is part participant, part observer and part personal.
He hopes to portray that crises are "messy, mucky things" and when you are in the middle of one it is not clear what will happen next.
Indeed. Dr Bollard did the media interviews for the book before the receivership of South Canterbury Finance triggered a $1.8-billion payout from taxpayers from a guarantee scheme created in a rush on a Sunday in October 2008.
Dr Bollard believes the "triangle of power" -- Government, Treasury and the Reserve Bank which face each other in Wellington -- worked well together to craft such responses, while acknowledging inevitable debate about the boundaries of interventions.
Neither the Government nor the opposition politicians sought to make political capital out of a very fragile situation, Dr Bollard writes.
The smallness of the Reserve Bank team and its multiplicity of roles also helped.
Though there were no bank nationalisations or runs on banks "demand for $100 bills did go up and they've never come back", Dr Bollard said.
The bank also moved early to ensure liquidity in markets by accepting a wider range of securities in its dealings.
Dr Bollard pays tribute to his team, particularly Simon Tyler, known as "Moose", who heads the markets division and bank regulator Grant Spencer as well as staff who volunteered to man the phones.
Dr Bollard, who considers himself to be a private person, also documents the impact of stress on his life. A debilitating migraine affected him around the time of the December Monetary Policy Statement in 2008.
At one point in October 2008 he found a pleasant cafe in the high street of Timaru and painted a watercolour in a sketch book he carries. His phone vibrated during an opera in Wellington and the talk at the races that year was about the crisis.
He is one of the few central bank governors in the world who does not have personal security and he found himself wondering if it was a good idea to be walking home in the dark alone through Wellington's botanical gardens after receiving a death threat.
2008 was a hell of year for the central banker and previous boss of Treasury. Reflecting now, Dr Bollard said he was clearer that the recovery was going to be a fragile process.
