WELLINGTON, May 9 (Xinhua) -- The International Monetary Fund (IMF) has declared New Zealand's banking system resilient and recommended ways to improve the strength of the country's financial sector and the regulatory framework, according to New Zealand's Reserve Bank on Tuesday.
In its Financial Sector Assessment Program (FSAP), the IMF said that the banking system is well-placed to manage risks and vulnerabilities associated with current developments in the housing sector, the high level of household debt, and low dairy prices.
The FSAP included a range of "stress tests" of large New Zealand banks.
The report said that New Zealand has a good institutional framework for macroprudential policy and that Loan-to-Value Ratio (LVR) restrictions have generated financial stability benefits, although it could be strengthened further.
The IMF advised New Zealand increase the intensity of supervision for both the banking and insurance sectors.
New Zealand Finance Minister Steven Joyce has welcomed the IMF's positive assessment of New Zealand's economy and its financial system.
The IMF has endorsed the Reserve Bank's current legislative proposal to improve the regulation and oversight of financial market infrastructures.
The Reserve Bank said it is considering the FSAP findings and recommendations in its areas of responsibility and the degree to which these might further its statutory purpose of promoting a sound and efficient financial system.
