20 Sep 2011

US visit used to distance NZ from European debt woes

7:06 am on 20 September 2011

Finance Minister Bill English and Reserve Bank Governor Alan Bollard will use a visit to the United States this week to distance New Zealand's banks from the problems faced by European lenders.

The trip comes just days after New Zealand's Reserve Bank cited rising borrowing costs for banks on foreign money markets as a reason for keeping the Official Cash Rate at its record low of 2.5%.

Dr Bollard says the surge is due to jittery financial markets rather than concerns about the riskiness of New Zealand's banks.

Mr English will meet US Federal Reserve chairman Ben Bernanke, attend an International Monetary Fund meeting and the annual meeting of the World Bank board of governors in Washington.

He says it is an opportunity to meet finance ministers from other countries, and to hear their take on the euro zone debt crisis and the prospects for their own economies.

"The problems appear to be growing rather than shrinking and it's important for New Zealand as a small, open economy to understand just what waves are going to come to us from the global economy."

Mr English says it is important that New Zealand continues to engage with its trading partners and share ideas on managing the challenges ahead.

ANZ economist Khoon Goh says Dr Bollard and Mr English will tell financial markets in New York that New Zealand banks are stable and have no connection with European debt woes.