finance and expenditure committee ( fec ) 2019 - 20 financial review of the reserve bank of new zealand governor ’ s opening statement date : 10 february 2021 tena koutou katoa, welcome all. it is a privilege to be here with you today – alongside the rest of the bank ’ s senior leadership team – to report on the reserve bank of new zealand ’ s achievements, challenges, and opportunities on what has been an extraordinary and unprecedented year. like many organisations and businesses, we, at te putea matua, have had to change our way of working, refocus our priorities, and take necessary actions to continue to support cashflow and confidence among new zealanders during the tough times. the experience of the past year has brought forward new challenges, risks, and opportunities for us. while our priorities in the recent ( 2019 - 20 ) financial year have been focused significantly on supporting new zealand ’ s economic recovery from the covid - 19 pandemic, we have also continued our work on a wide range of initiatives, including : working with the treasury to have the new reserve bank of new zealand bill introduced to parliament ; agreeing to a new funding agreement with the minister of finance ; working closely with our fellow council of financial regulators ( cofr ) members to manage and co - ordinate regulatory work ; launching a new payment settlement system ; progressing our te ao maori strategy ; and managing climate risks to our financial system, among others. at the end of june last year – new zealand looked and felt quite different to what it does some eight months later. we ’ d just entered level 1 – activity was starting to pick up, sporting events and larger gatherings were going ahead and we were all finding our ‘ new normal ’. but - there was so much uncertainty about how the global pandemic would continue to unfold, and what responses would be needed. while we ’ ve got more information to work from now, and global policy responses are clearer, we still continue to learn and adapt. we are committed to responding to challenges and progressing initiatives that will ensure we remain an active, relevant cornerstone of new zealand ’ s economy and society. page 2 of 9 i thank my board, my colleagues and our people for their dedication, hard work, flexibility, and assistance. let me take you through some of the initiatives we have worked on in the past year : responding to the covid - 19 pandemic early in 2020, when the covid - 19 pandemic

”, the causes of low growth in japan in the 1990s and 2000s were different and it is somewhat misleading to discuss the two periods together. in the 1990s, low growth was mainly brought about by the deleveraging associated with the unprecedented bursting of the bubble. in the 2000s and thereafter, the major causes of low growth in japan have been rapid population aging and population decline. for japan ’ s high growth period including a comparison with the current state of the chinese economy, see masaaki shirakawa, “ the transition from high growth to stable growth : japan ’ s experience and implications for emerging economies ”, remarks at the bank of finland 200th anniversary conference in helsinki, may 5, 2011. http : / / www. boj. or. jp / en / announcements / press / koen _ 2011 / ko110506a. htm for japan ’ s experience after the bubble burst, see masaaki shirakawa, “ way out of economic and financial crisis : lessons and policy actions ”, speech at japan society in new york, april 23, 2009. http : / / www. boj. or. jp / en / announcements / press / koen _ 2009 / ko0904c. htm bis central bankers ’ speeches regarding the impact of the bursting of the bubble in the first half of the two periods in question, i do not have much to add to what i have already explained. if i can point out one difference, the rise in the unemployment rate in japan was relatively limited ( chart 12 ). japan ’ s unemployment rate peaked at 5. 4 percent, significantly lower than the double digit figures reached in the united states and major european countries. this is attributable to the fact that wage levels were adjusted in a reasonably flexible manner, reflecting society ’ s preference to prioritize employment. that people ’ s jobs were preserved was a positive in terms of social stability. at the same time, it also had a negative consequence. wage levels were adjusted but not sufficiently for the magnitude of the shock to the economy, and a situation arose in which effectively unemployed people retained their jobs at companies. this delayed the necessary reallocation of resources to respond to demand and cost changes after the bubble burst. the decline in wage levels also contributed to deflation through a decline in the prices of services which are labor intensive. in fact, a significant portion of the inflation differential between japan and the united states reflects changes in service prices