order to be future focused and embed a continuous improvement mindset, some of our key recommendations that all boards should consider include : _ _ _ _ _ _ _ _ _ _ _ _ see institute of directors ( 2023 ). kotahitanga – principles of maori governance, for more information. available here : kotahitanga – principles of maori governance | iod nz towards good governance in the financial system of aotearoa unclassified unclassified • • • • • • undertaking robust suitability assessments which outline the skills, diversity and capabilities required on the board. this will assist the board in maintaining the collective skills and experience to guide and oversee the organisation ’ s long - term strategy ; ensuring that succession planning is thorough and well thought out to mitigate future composition risks, maintain an appropriate balance of skills, experience and diversity, and ensure continuity ; actively considering the diversity needs of the board to support them in their role ; assessing director capacity against a formal framework to ensure directors have sufficient time to be effective in their role ; conducting regular and robust evaluations to drive effective board performance. this includes having a clearly defined, and comprehensive criteria and ensuring improvements are identified and implemented ; and providing effective and appropriate challenge to one another and management. this continuous improvement mindset is the essence of a being a good kaitiaki. it is about being a temporary guardian or caretaker, with responsibility to hand things over to the next generation in a better position and ready for the future. next steps and conclusion thank you for this opportunity to join you this morning, as deputy governor and as a fellow member of the institute of directors. if you were directly involved in the governance thematic review, thank you for your willingness to participate. the examples of good practice we observed in your entities are shared in our report so others can learn from them. i also hope you will embed any good practices that you don ’ t currently have in place. if you weren ’ t involved in the governance thematic review, we hope that this work is of wider value, providing a unique opportunity to learn from others – both for other financial institutions and those outside the financial industry. at the reserve bank, the insights will inform our supervisory priorities and input into standards and guidelines as we embed the new deposit takers act 2023 ( dta ) and review of the insurance prudential supervision act 2010 ( ipsa ). finally, i wanted to finish with a whakatauki ( proverb ) first said in

exchange rate being higher than is currently the case. the bank does intervene in the foreign exchange market from time - to - time. but evidence from the past, here and elsewhere, suggests foreign currency intervention is unlikely to have a sustained impact in lowering the exchange rate. 7 this is because daily foreign currency transactions in new zealand dollars swamp any practical intervention capacity, averaging around $ 100 billion per day with more than 80 percent of the transactions taking place offshore. at best the reserve bank can attempt to smooth the peaks and troughs of the exchange rate. of course, reasonable people can differ on what is the appropriate scale of intervention used to smooth some of the volatility. but the old economic saying that there is no free lunch still applies : the greater the scale of intervention, the greater the financial risk carried by the tax payer. more active macro - prudential policy has been undertaken recently to help reduce the buildup in systemic risk in the banking sector resulting from imbalances in the housing sector. the current low interest rates, although appropriate for the current inflationary environment, are contributing to those financial stability risks. in such circumstances one might consider using monetary policy more aggressively to lean against house prices. 8 while this would mean inflation would take longer to rise to the mid - point of the target band it would reduce the risk of a future crash in the housing market. however, using monetary policy to reduce the financial stability risks of a booming housing market would put additional upward pressure on the exchange rate. instead, we have used macro - prudential policy, in particular the loan - to - value ratio limits, to help moderate the risks in the housing market. this addresses the financial stability issue more directly and reduces the need for monetary policy to put pressure on interest rates and the exchange rate. what, other than monetary policy, will remedy the real exchange rate? saying there is little monetary policy can do about the exchange rate, is not the same as saying there is little that can be done. the reserve bank undertakes a great deal of research and analysis on the exchange rate. one example of this research was an exchange rate forum jointly hosted by the reserve bank of new zealand and the treasury earlier in the see http : / / www. rbnz. govt. nz / research _ and _ publications / speeches / 2013 / 5150125. html. chetwin, w and a munro ( 2013 ) “ contemporary exchange rate regimes : floating, fixed and hybrid ” paper presented to