maintaining credibility in times of change panel remarks delivered to the institute for monetary and economic studies ( bank of japan ) in tokyo on 30 may 2019 by christian hawkesby, assistant governor and general manager of economics, financial markets, and banking prepared with cameron haworth and omar aziz 2 the terrace, po box 2498, wellington 6140, new zealand telephone 64 4 472 2029 online at www. rbnz. govt. nz introduction tena koutou katoa thank you for the opportunity to talk about the reserve bank of new zealand and the changes we are making to maintain our credibility in times of change. i would like to focus on two building blocks of credibility : • renewing a social licence to operate by aligning our objectives with the needs of the public ; and • achieving those objectives through good decision making enabled by a framework of good governance. a common theme is the importance of transparency. the imperative for change : central banks in the 21st century the first building block of credibility is the renewal of a social licence to operate — by this i mean the legitimacy an institution earns by serving the public interest. it is granted by the public when an institution is seen to fulfil its social obligations. 1 new zealand was the first country to officially adopt inflation targeting in 1989, with a number of central banks around the world following the example. 2 under a single - decision - maker model, we brought inflation down from around twenty percent to two percent in five years. in doing so, we helped build our credibility during the high - inflation environment of the times. 3 fast - forward to 2019, and monetary policy in new zealand has undergone major change. firstly, we have adopted a dual mandate, focused on achieving price stability and supporting maximum sustainable employment. secondly, we have adopted a committee structure for decision making, and are delivering greater transparency in our decision making. why the change? the reform of our framework was not merely a simple choice based on technical performance. as you can see in figure 1, when it comes to inflation and growth, over the past 30 years inflation - targeting central banks ( e. g. new zealand and the united kingdom ) have a pretty similar track record to central banks with a dual mandate ( e. g. australia and the united states ). 4 the imperative for change comes from more than examining our history ; it comes from our expectations of the future, and the present we find ourselves in. our policy framework changed because times are changing. for the reserve

way, as is evidenced today by all the examples we ’ ve heard, by all the institutions present, and by all the inspiring speakers and participants. and once we have reached that goal of all finance being sustainable, we will have ensured a better horizon for our children and their children. a horizon - a future! - that to our children is not tragic, but positive and bright. we will have overcome the tragedy of the horizon. that “ the last syllable of recorded time ” be not the word “ tragedy ”. so let us together ensure that horizons from this day will no longer be associated with tragedy, but instead with a bright, green, sustainable future. let the future of finance be that of financing the future! thank you.