national bank chief executive ’ s employment contract be between that person and the board of the national bank, and that any amendments to the national bank ’ s constitution have our consent. the intent of these measures is to ensure that there is coherence in the national bank ’ s local accountability arrangements and that the local board remains in a strong position to exercise independent and meaningful governance of the management of the national bank, in the best interests of the national bank, in good times and in bad. this requirement should be seen as a means of reinforcing our emphasis on the role of directors in overseeing a bank ’ s operations, and our ability to manage a crisis involving the failure of any large bank in new zealand. third, we require all prospective appointments of directors or senior executives to the anz or the national bank to be advised to us and the appointments made only if we have no objection. this measure ensures that the appointment process is in line with our new obligation introduced by the rbnz amendment act to have regard to the suitability for their positions of directors and senior managers of registered banks. generally speaking we would be unlikely to object to an appointment unless there were strong reasons to believe the individual would be unsuitable for a position of responsibility over a registered bank. finally, we require that each registered bank in the anz group maintain a level of capital in line with our current policy on capital adequacy for consolidated banking groups. this tightens up the capital adequacy rules a little in this case, to account for the fact that the anz group now contains two systemically important registered banks. we regard it as important that each of these banks maintain adequate capital on a solo basis. we took these steps in pursuit of our statutory obligations to promote the maintenance of a sound and efficient financial system in new zealand, and to avoid significant damage to the financial system that could result from the failure of a registered bank. we don ’ t think the conditions will make a great difference to the current day - to - day running of the national bank ’ s operations under normal circumstances. however, we do see them as important in bolstering our ability to deal with a crisis situation involving the bank or the anz group. we sought to impose the conditions in a manner consistent with our general approach to banking regulation, which is not to get into the business of managing banks, but to put the onus for effective bank management on the shoulders of those bestplaced to carry that task - the

values. source : quotable value ltd, statistics new zealand, rbnz. an important part of farming is the management of risks. at any time the sector needs to be able to withstand a combination of risks from poor weather, falling land prices, unhedged exchange rate pressures, trade restrictions, animal disease, and falling commodity prices, especially in an environment of rising operating costs. agricultural lending, at about $ 28bn, now represents around a third of registered bank lending to the corporate sector in new zealand. i should emphasise that when we examine rural sector balance sheets and bank lending exposures we do not see generic signs for financial sector concern. the reserve bank's financial stability report suggests banks do not look over - committed in the agricultural sector and farmers are unlikely to renege on debt. what concerns us more is that we could be heading to a period of lower economic returns from over - investment in land. at the moment the new zealand economy is moving into a rebalancing period. a strong domestic sector is weakening, while the export sector is gradually strengthening, helped along by a softer new zealand dollar. with our current account deficit over 9 per cent, this is a rebalancing that has to take place. from an overall economic viewpoint, we are pleased to see it underway. the big question for us is : will this rebalancing take place during a period of continuing strong world growth and good commodity prices? this is of course a complex question, but there is some reason to be optimistic - there is evidence that we may be enjoying not just one - off factors, but a better enduring trend in prices for our production than has been the case for some time. it is not quite the story of the 1960s again, but medium - term prospects do look better than the turbulent 1980s and 1990s.