FX.co ★ RBNZ Warns of Rising Financial Risks Amid Global Volatility

In its May 2025 Financial Stability Report, the Reserve Bank of New Zealand (RBNZ) highlights that risks to the nation's financial system have escalated over the past six months, primarily due to global market instability and escalating trade tensions fueled by extensive U.S. tariffs. Governor Christian Hawkesby stated, "Although the global economic landscape has become more volatile, our financial institutions are well-positioned to bolster the economy." He further pointed out that geopolitical developments have increased financial market volatility and pose a significant risk to global economic performance. Despite domestic challenges such as elevated interest rates, unemployment, and a sluggish housing market, Hawkesby assured that banks continue to be profitable and maintain robust capital and liquidity reserves. Additionally, reduced borrowing costs and strong agricultural exports are facilitating debt serviceability as the economy slowly recovers from a prolonged recession.