covid - 19 and the reserve bank ’ s balance sheet a speech delivered to 2020 kanganews new zealand capital markets forum in wellington on 20 august 2020 by christian hawkesby, assistant governor1 general manager, economics, financial markets and banking group chair, assets and liabilities committee with many thanks to support from andrew besuyen, jamie culling, patrick o ’ meara, rebecca palmer, and sam wynands, and input from geoff bascand, michael callaghan, bevan cook, adrian orr, sandeep parekh, vanessa rayner, and mike wolyncewicz. ref # 9122402 v2. 12 introduction e nga mana, e nga reo. e nga karanga maha o te wa. tena koutou katoa. it is great to be able to participate in this conference that was originally scheduled for late february, albeit still remotely due to covid - 19 restrictions. the last time i spoke to a financial markets audience in person was in late - january at a conference in sydney. i recall being struck at the time that i had never seen a conference organiser so happy to see me arrive at a venue. turns out it was nothing personal. all the rest of the keynote speakers were part of a world tour and had got stuck in hong kong in self - isolation. travelling from wellington, i was the only one that had made it in person. in my mind, that was a moment when covid - 19 became something very real and tangible, spreading to our part of the globe. of course, the world has changed remarkably since late january in response to this global health crisis. one of those ways is that the reserve bank ’ s balance sheet has increased from around $ 25 billion to $ 60 billion ( figure 1 ), and growing. thousands figure 1 : size of the rbnz balance sheet nzdbn nzdbn source : reserve bank of new zealand. for a long time, the reserve bank has been seen primarily as an institution that makes announcements on interest rates every six weeks. however, periods like the global financial crisis ( gfc ) and covid - 19 serve as stark reminders that we are ultimately a bank – the bank to the banking system and the bank to the crown ( the new zealand government ). ref # 9122402 v2. 12 in recent years, we have used the story of tane mahuta to illustrate to the general public this broader

media / reservebank / files / monetary % 20policy / about % 20monetary % 20policy / remit - for - themonetary - policy - committee - april - 2019. pdf? la = en & revision = a5783e23 - a90b - 43d5 - 876975c448eef89b. reserve bank of new zealand. ( 2020a, march 19 ). cash and other payments systems ready for covid - 19 [ press release ]. retrieved from https : / / www. rbnz. govt. nz / news / 2020 / 03 / cash - andother - payments - systems - ready - for - covid - 19 reserve bank of new zealand. ( 2020b ). financial stability report may 2020. retrieved from https : / / www. rbnz. govt. nz / financial - stability / financial - stability - report / fsr - may - 2020. reserve bank of new zealand. ( 2020c, april 2 ). longer - term funding to support business lending [ press release ]. retrieved from https : / / www. rbnz. govt. nz / news / 2020 / 04 / longer - term - fundingto - support - business - lending. ref # 9122402 v2. 12 reserve bank of new zealand. ( 2020d ). monetary policy statement august 2020. retrieved from https : / / www. rbnz. govt. nz / monetary - policy / monetary - policy - statement / mps - august - 2020 reserve bank of new zealand. ( 2020e, march 16 ). ocr reduced to 0. 25 percent for next 12 months [ press release ]. retrieved from https : / / www. rbnz. govt. nz / news / 2020 / 03 / ocr - reduced - to - 025percent - for - next - 12 - months. reserve bank of new zealand. ( 2020f, april 6 ). offer to purchase local government funding agency bonds [ press release ]. retrieved from https : / / www. rbnz. govt. nz / markets - andpayments / domestic - markets / domestic - markets - media - releases / offer - to - purchase - localgovernment - funding - agency - bonds. reserve bank of new zealand. ( 2020g ). principles for using unconventional monetary policy in new zealand. retrieved from https : / / www. rbnz. govt. nz