probably need to rely on information from a wide range of qualitative and quantitative sources to help identify the presence of a bubble and understand the nature of it. how successful we will be remains an open question. the crisis has prompted a revival of interest in money and credit, which in recent decades central bankers, including ourselves at the rbnz, have tended to put less weight on in the monetary policy formulation process. several factors have contributed to this revival. first, the impairment of the flow of credit as a result of the financial crisis has led to fears of a creditless recovery, or at least a recovery held back by less plentiful credit. second, there has been a significant change in money flows during the crisis ( with depositors favouring the banks over the non - banks ). overall, there has also been a recognition that credit growth over the past decade was excessive and a potential risk to financial stability given the build - up in leverage and rising asset prices that accompanied it. we are continuing to build our understanding of money and credit at the rbnz, and its inter - relationship with both sectoral financial decision making and potential risks for the banking sector. however, much still needs to be learned about the relationships, especially the nature of causality and how policy makers can utilise the relationships to achieve their goals. inside regulatory institutions within the area of prudential supervision, there has been more focus on the funding markets and balance sheets of the main banks, including their debt maturity and risk management policies. this follows the closure of international funding markets in late 2008 and the increased fragility of markets generally. at the rbnz, our focus is particularly on the four systemically important banks in new zealand, which are all subsidiaries of australian owned parent banks. during the global financial crisis we learned that much of the mandated disclosure of public information from the banks was available with too long a lag and was too general to be much use in predicting stress vulnerability. consequently we have reduced the information we require to be made public but are requiring more real time private information about funding, bad debt, deposits, loans etc. these receive very close attention from the regulator. the need for timely information has required much greater use of financial market data, and detailed, up - to - the - minute institutional data in assessing the condition of financial institutions. as a result, there has been greater co - ordination between financial market monitoring and speech at the eden project, cornwall, 12 october 2004.

actively reducing greenhouse gas emissions. and to overcome the free - rider problem implied by this negative externality there are two key policy approaches – taxes on greenhouse gas emissions, and emissions trading schemes. new zealand, as part of its obligations under the kyoto protocol, has elected an emissions trading scheme. the scheme is designed to reduce annual greenhouse gas emissions from various sectors of the economy to 1990 levels over the 2008 - 2012 reference period. from 2008 the scheme will be phased in gradually for different sectors. for any producer / sector which emits more than its greenhouse gas allocation, additional emission units will have to be purchased, either from other producers or from overseas. much of the cost of purchasing additional units will initially be borne by government, with the amount of government support varying by sector. from 2013 the amount of government support will progressively decline with assistance to be completely phased out by 2025. the phased introduction of the scheme implies higher prices for liquid fuel ( from 2009 ) and electricity ( from 2010 ). the reserve bank estimates that both the direct and indirect effects of these higher energy prices will add 0. 25 percentage points to inflation in 2009 and 0. 35 percentage points in 2010. 20 in addition to these first - round effects, there may well be second - round inflation expectations effects of the scheme. as with other cost shocks the reserve bank stands ready to respond to the more generalised inflation pressures from the scheme. however, the implications for monetary policy are somewhat clouded by the this assumes an emissions price of nzd 21 per tonne. see box c in the december 2007 monetary policy statement for details. magnitude and speed of any second - round effects, the price of emission units and the effect on economic activity. 8. conclusion over the past half decade demand - side inflation pressures in new zealand have been significantly influenced by the shock to personal consumption from the run - down in the household saving rate, and the related increase in household net wealth from the housing boom. this has helped reinforce the underlying strength of the economy and associated pressure on resources. more recently, the increase in global dairy prices has added to these demand side pressures by boosting incomes at the farm gate. increases in commodity prices such as oil and other imported raw materials have also added to inflation pressure by increasing the cost structure of the production process. the new zealand government ’ s decision to adopt an emissions trading scheme as part of its kyoto protocol obligations will add additional cost pressures onto the economy over the coming years. to date, new zealand has