this responsibility, with the purpose of ‘ promoting the maintenance of a sound and efficient financial system ’. these changes followed the new zealand financial reforms of the 1980s, including privatisation of the banking system and liberalisation of financial markets. following these reforms, and throughout the 1990s, the reserve bank was well known internationally for its ‘ light touch ’ approach to supervision, and its focus on disclosure and market discipline. 5 the absence of deposit protection was a distinguishing feature of new zealand ’ s regulatory and supervisory approach. 6, 7 this approach was designed to align incentives on banks ’ boards and ensure the sound management of banks. it also meant that depositors had a strong incentive to monitor the financial strength of their bank. at an extreme, it was an approach of buyer beware. broadening expectations on central banks and prudential regulators however, there has been a significant change in the landscape since then. lessons have been learnt from experience both domestically and internationally, especially from the global financial crisis. there are also growing expectations on us, as well as on central banks and prudential regulators internationally, to take a wider view of the financial system, recognising its interconnectedness with the rest of society. some of these broadening expectations on us include : _ _ _ _ _ _ _ _ _ _ _ _ 4 see hunt, c. ( 2016 ), a short history of prudential regulation and supervision at the reserve bank. reserve bank bulletin vol 79 ( 14 ), available at : rbnz. govt. nz / - / media / project / sites / rbnz / files / publications / bulletins / 2016 / 2016aug79 - 14. pdf 5 our tradition of the importance of market discipline through disclosure still endures, and is why we have created the bank financial strength dashboard, and support the development and strengthening of mandatory climate disclosures. 6 see brash, d. ( 1996 ). a new approach to banking supervision. address to the centre for the study of financial innovation, available at : rbnz. govt. nz / hub / publications / speech / 1996 / speech1996 - 06 - 05 7 as part of the proposed deposit takers act, a deposit compensation scheme ( dcs ) is proposed to be introduced. this will allow consumers to have confidence that their deposited funds are safe in the event of an entity failing, up to a total of $ 100, 000 per institution, per depositor. our transformation as a pr

loans societies, ten major superannuation funds and six life insurance companies. over the last two years, two commercial banks were sold and amalgamated into the operations of the other two existing banks. in line with its new powers under the bfia 2000, the central bank initiated enforcement actions against a number of institutions, including the former government owned commercial bank and finance companies, in an attempt to rectify problems that threatened depositors ’ funds or the overall stability of the financial system. the central bank also instituted care - taker management for a few large savings and loan societies under the savings and loan societies act, and liquidated 76 dormant societies as part of its revitalisation programme. legal action was also taken against several fast - money schemes that continue to solicit deposits from the public. new initiatives the bank issued new standards on foreign currency exposures on 28 september 2001, setting a limit of 10 percent of bank capital for any single foreign currency exposure, and 15 percent of capital for total foreign currency exposures. the new standard also requires banks to report their exposures each day to the central bank in electronic format. the bank is reviewing the existing prudential standards ( i. e. regulations ) covering capital adequacy, large exposures, and asset quality and provisioning that applies to banks and finance companies, with the ta from the imf. these prudential standards have been reviewed and implementation will take commence in 2003. new polices are now being drafted to place limits on shareholdings and market share of the banks. 3. latest economic and outlook for 2003 economic growth preliminary estimates of economic activity indicate that real gdp declined by 0. 5 percent in 2002, following a revised decline of 3. 4 percent in 2001. the decline was due to the continued depressed levels of activity in the mineral, building and construction, retail and wholesale, and electricity, gas and water sectors. for 2003, real gdp is projected to increase by 1. 8 percent with growth in both the mineral and non - mineral sectors. the agriculture / forestry / fisheries sector is forecasted to grow by 2. 9 percent in 2003, reflecting increased production of all agricultural export commodities. balance of payments preliminary balance of payments data for 2002 showed an overall deficit mainly reflecting a widening current account deficit, due to lower merchandise exports of most agricultural commodities, gold, copper, crude oil, forestry and marine exports, combined with higher imports and net service payments. the level of gross official reserves at the end of