RBNZ Acquires Shares in BIS

The Reserve Bank of New Zealand today announced that as of last week it has taken up an offer to become a shareholder in the Bank for International Settlements (BIS).

The BIS is an international financial institution based in Switzerland. It is owned by about 50 central banks and provides a range of financial services to central banks, international financial institutions and governments.

The cost of the BIS shareholding is approximately NZ$100 million, which has been raised from the Reserve Bank's balance sheet. In addition, the Bank has hedged the exchange rate risk on the investment.

The benefits to both the Reserve Bank and New Zealand include increased access to foreign currency funding, which in a crisis could enhance the Bank's capabilities to intervene in markets to maintain stability. Being a BIS shareholder also more generally strengthens the Reserve Bank's connections with the international central banking community, which in a period of financial stress could be very useful.

Reserve Bank Governor Alan Bollard commented "We have carefully reviewed the net benefits from being a shareholder in the BIS and concluded that it is in the Bank's and the national interest, in terms of both access to BIS financial services and the return on the shares."

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