Glossary

(The) Act/ (RBNZ) Act

The Reserve Bank Act 1989

AML/CFT

Anti-Money Laundering and Countering the Financing of Terrorism

Under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, the Reserve Bank is one of three supervisors tasked with ensuring firms comply with new obligations designed to help deter and detect money laundering and terrorist financing.

AUD

Australian Dollar

Basel III

Global regulatory standards on bank capital adequacy and liquidity, published by the Basel Committee on Banking Supervision in December 2012.

BIS

Bank for International Settlements

An international financial institution based in Switzerland, owned by about 50 central banks and providing a range of financial services to central banks, international financial institutions and governments.

CAD

Canadian Dollar

CLS system

An international system run by CLS Bank International intended to reduce foreign exchange settlement risk (Herstatt risk). The CLS system does this by ensuring payment of both currencies in a foreign exchange transaction are made simultaneously and irrevocably. The Reserve Bank is a member of the international CLS Oversight Committee.

CPI

Consumers Price Index

The All Groups Consumers Price Index published by Statistics New Zealand. The CPI measures the rate of change in prices of goods and services purchased by New Zealand households.

EMEAP

Executive Meeting of East Asian and Pacific central banks and monetary authorities

A cooperative organisation of central banks and monetary authorities in the East Asia and Pacific region, comprising Australia, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore and Thailand.

ESAS

Exchange Settlement Account System

The Reserve Bank’s banking service for certain qualifying institutions that need to make regular high-value payments with each other.

EUR

Euro zone euro

FSAP

Financial Sector Assessment Programme

A comprehensive review of a country’s financial system, with a particular focus on the quality of financial sector regulation.

FSIS

Financial Sector Information System

The Bank’s central database for time-series data.

FSR

Financial Stability Report

A six-monthly report assessing the soundness and efficiency of the New Zealand financial system.

GDP

United Kingdom pound

IMF

International Monetary Fund

The International Monetary Fund is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

IPSA

The Insurance (Prudential Supervision) Act 2010

The Act provides for the Bank’s role as prudential supervisor of the insurance sector.

JPY

Japanese Yen

LVR

Loan-to-value ratio

A loan-to-value ratio (LVR) is a measure of how much a bank lends against mortgaged property, compared to the value of that property.

MPS

Monetary Policy Statement

A quarterly assessment, accompanying an OCR review, of how the Bank proposes to achieve its monetary policy target (see PTA); how it proposes to formulate and implement monetary policy during the next five years; and how monetary policy has been implemented since the last MPS.

NBDTs

Non-bank deposit takers

Finance companies, building societies and credit unions, which take deposits from the investing public and which are not registered banks under the Act.

NZClear

A real-time settlement system providing the financial markets with clearing and settlement services for high-value debt securities and equities.

NZD

New Zealand Dollar

OCR

Official Cash Rate

The interest rate set by the Bank to meet the inflation target specified in the PTA.

PTA

Policy Targets Agreement

A contract, negotiated between the Government and the Governor of the Reserve Bank, defining the Bank’s price stability target.

SDR

Special Drawing Right

Unit of account of international reserve assets created by the International Monetary Fund (IMF) to supplement the reserves of IMF member countries. Its value is based on a basket of key international currencies.

SBI

Settlement Before Interchange

The process, operated under Payments New Zealand Ltd’s rules, by which any two banks prepare and process files containing details of their customers’ bilateral transactions. The net value of the transactions is settled by one bank making a payment from its ESAS account to the other bank’s ESAS account. Once settled, the file containing details of the customers’ transactions is delivered to the destination bank, which will then update its customers’ records.

SIFMI

Systemically Important Financial Market Infrastructures

TWI

Trade-Weighted Index

A measure of the value of the New Zealand dollar relative to the currencies of New Zealand’s major trading partners.

USD

United States Dollar