last year we released a paper for consultation, setting out the rbnz's proposed outsourcing policy. we had already established principles for our proposed outsourcing policy and applied those to anz national bank upon approval of its merger. the consultation paper formalised these principles and set out a policy framework for application to all systemic banks and some other categories of banks. submissions on the discussion paper closed at the end of february and bank staff are currently working their way through those submissions. the outsourcing policy is very much outcomes - focussed, so individual banks can tailor a solution that best suits their situation and needs, while meeting our requirements. in this way costs can be minimised and a level playing field maintained. we intend to work closely with banks as they go about implementing the policy. there is no doubt that banks will incur some operational costs due to the outsourcing policy. however, we think these costs will be small and manageable, especially relative to australian banks'annual gross revenue, profits, and the potential costs of a bank failure, despite the claims in the media to the contrary. much of the public debate around the outsourcing policy has focussed on direct operational costs and thus the relatively small loss in productive efficiency that may occur. however, there are other aspects to efficiency to consider also, including allocative and dynamic responses. for example, our outsourcing policy could lead to better capital allocation due to more local decision making capacity, as well as systems that are more flexible and responsive to local needs. these aspects are especially important for the growth of small to medium size enterprises that dominate the new zealand business landscape. such benefits could accrue to bank shareholders and customers, as well as the wider new zealand economy. at the heart of the reserve bank's crisis management work is the development of a crisis management toolkit that will provide tools, policies and procedures to guide the high - stakes decisions supervisors would have to make under very tight time frames. crisis management can be thought of as having two phases. phase one is the very short period, perhaps a day or two, immediately following the discovery that a bank is in severe distress. it involves decisions around whether and how to get the bank solvent and operating again. phase two is the potentially lengthy subsequent period, during which it must be decided what to do with the bank over standard and poor's ratings direct, " robust local operations and strong parents fortify credit quality of new zealand banks

a strong sense that anything impacts the medium - term scenario and moves our medium - term inflation expectation further away from 2 percent, then there would have to be a monetary policy reaction. if it ’ s a pure short - term development, then there may be targeted instruments, such as ways to provide more liquidity, to cope with specific temporary situations, that doesn ’ t have to be standard monetary policy. it can be within the universe of non - standard measures. ” “ it ’ s our duty to prepare for all possibilities. it ’ s normal preparation for governing council meetings and monetary policy discussion that we go through the scenarios and see what we can do. ” on financial - market fragmentation : “ fragmentation in european markets will subside only very gradually. that ’ s because economic convergence itself is slow. it ’ s taking place but it takes time for reforms to feed into the economic fabric of each country. and then it takes time for structural changes in the economy to be acknowledged by financial market participants, particularly in terms of credit supply. there ’ s not much that we can do about that time dimension. ” on interplay between government reforms and monetary policy : “ the priority is for governments to deliver on what they have committed to in terms of growth and structural reforms. we have positive news that the situation is improving in several countries and we have strong commitments to reforms, such as the announcements made last tuesday by the french president, which i take as an important statement of intent. we also need strong actions to strengthen confidence in the banking sector and complete the whole banking union project. the role of the ecb is to support these processes. we have a clear treaty mandate to support the policies of the community. the best way to do this is to deliver on our inflation mandate. the ecb will deliver on its mandate. but that ’ s not a sufficient condition to deliver growth in europe. it ’ s a necessary condition but not a sufficient condition. ” “ coming to monetary policy, we have the scenario of a slowly developing growth, inflation slowly coming back to the 2 percent number over the medium term, but there are risks around this baseline scenario. we would have different answers to different risks. that ’ s why we need a range of instruments. but it doesn ’ t serve a purpose if the public discussion of monetary policy starts with the instruments. the instruments are the tail that wags the dog. ” on the economy : “ what we ’ ve seen lately is a series of positive