The country was 10th best for financing through the local equity market and in the top 20 for availability and cost of financial services, and venture capital availability.
NZ financial markets 4th best in the world - report - NZ Herald
One of these changes was the establishment of the FMA in , whose mandate is to promote confidence and participation in the financial markets. Phil O'Reilly, chief executive of Business NZ, said it was unsurprising the country had scored so well considering how well its banks stood up through the Global Financial Crisis.
O'Reilly said New Zealand's business community was fairly upbeat compared to others. Although he thought New Zealand's 18th ranking for access to venture capital seemed a bit high, that had to be seen in a global context. Eighteenth suggest we're at the back end of the developed countries. Unlike O'Reilly, the New Zealand Initiative's executive director Oliver Hartwich said he was surprised New Zealand had ranked so highly for its financial market development. We may be well-regulated and well-functioning but I don't think our market is a market leader," he said.
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Hartwich said the Initiative's business members were all happy with the way the markets were being regulated. The Global Competitiveness Report said the financial and economic crisis had highlighted the importance of a sound and well-functioning financial sector.
An efficient financial sector meant resources could reach the right entrepreneurial or investment projects, it said. A new generation of young people, dubbed ''property orphans'' may be destined to be renters for life. The Bank of International Settlements BIS , the bank used by central banks, confirmed New Zealand houses are among the most "unaffordable" in the world compared to people's incomes. Whenever a bank makes a loan, it creates a deposit in the borrower's bank account, thereby creating new money. The bank says that this differs from the story found in some economics textbooks.
The retiring head of the Financial Markets Authority apologised for the mistakes made saying "You were let down". Download Ogg vorbis or MP3.
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Download Ogg vobis or MP3. The numbers in your bank account were created out of thin air by Australian banks and to a lesser extent Kiwibank , not by the NZ government. This money creation process by the banks creates distortions in our economy and is the main contributor to rising house prices. We propose that the Reserve Bank issues our money supply, rather that private banks.
A Working Paper by the IMF titled The Chicago Plan Revisited - released in August provides a good background on the current system and on page 5 describes banks being able to generate their own funding as "an extraordinary privilege that is not enjoyed by any other type of business". The one hour You Tube documentary reveals how money is at the root of our current social and economic crisis.
Under New Zealand law the Treasury is the only issuer of notes and coins. But these laws haven't been updated to account for the fact that almost all money now is electronic. Because of this loophole, banks worldwide now have the power to create money, effectively out of nothing.
The impact of increasing debt levels may be lost on a lot of people. Follow this link to find out how it affects you. Money creation by private banks requires permanent growth in the economy which is not possible in a world of finite resources. Under the current system the power to create money in New Zealand belongs to Australian banks: The three domestic-owned banks are relatively small as Kiwibank has a market share of 3.
A well-developed and liquid government yield curve, for example, can assist in the pricing of corporate securities, and therefore more accurately determine the cost of capital for firms. Historically, the lack of long-term New Zealand government bonds to act as benchmark securities may have limited the ability of corporates to issue long-term debt and contributed to the corporate bond market remaining small and illiquid.
Since there has been increased issuance in the New Zealand government bond market to fund fiscal deficits stemming from the recession and the rebuild of Canterbury figure B2. Throughout this period, the New Zealand Government has faced relatively low borrowing costs by historical standards , while a lack of national savings and strong international demand led to a rise in the proportion of non-residents holding New Zealand government debt. The development of the Local Government Funding Authority, which helps local authorities throughout New Zealand raise funds for capital expenditure more efficiently, has also encouraged a significant increase in local government debt issuance since The long-term debt of New Zealand banks, when issued domestically, can also help facilitate capital market deepening.
In recent years, the issuance of bonds by New Zealand banks has been reasonably subdued, reflecting the role of domestic retail deposits in largely meeting bank funding requirements see chapter 5. Issuance has picked up somewhat over , as banks have rolled over their debt to maintain their presence in the market. In terms of New Zealand non-financial corporates, widening bank funding spreads and tighter bank lending conditions during the crisis precipitated an increase in activity in the local corporate bond market, as large and highly-rated firms sought to obtain cheaper, more diversified sources of funding figure B3.
Issuance subsequently declined, partly due to increased competition for corporate lending from the banking system. Over time, continued growth in corporate bond issuance should help to build market liquidity and broaden the investor base for corporate debt in New Zealand. However, the limited number of New Zealand non-financial corporates in rating categories which meet the majority of institutional investor mandates typically single-A and above may impede new issuance over the longer term.
Overview of the New Zealand financial system
The NZX is an example of a public market where new stock is issued and sold to investors who become shareholders. Private markets involve the non-public offering of debt and equity, typically to a small number of investors. Large firms may privately place large debt issues, while firms in the early stages of development might raise funds through private equity, and venture and angel capital markets. Note, economic growth can also influence financial market development — in this sense causation can run both ways between deep and liquid capital markets and long-run economic growth.
By contrast, funding for the business and agricultural sectors provided by banks and non-bank lending institutions amounts to around 55 percent of GDP. Read more information on how the Reserve Bank releases information. Go to the live-stream.