Regulatory Alerts2020-04-30
Memorandum of Understanding on the Use of Alternative Monetary Policy Tools
The Reserve Bank of New Zealand and the Minister of Finance established a process for the Bank to request Crown indemnities for financial losses arising from the use of alternative monetary policy tools. This agreement allows the Bank to utilize instruments such as negative interest rates or large-scale asset purchases when the Official Cash Rate cannot be lowered further, balancing operational independence with fiscal risk. The framework mandates specific reporting requirements and a five-year review cycle to ensure accountability and assess the effectiveness of these tools in meeting economic objectives.
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