The RBNZ has made it easier for banks to borrow money off them, in order to stave off a squeeze in credit in the banking sector. This sounds fine to me, and the measures they put in place seem reasonable, there was one thing I did not understand though. It says that the bank is selling more short-term bonds, wouldn’t this contract the money supply and reduce liquidity?
Maybe the reporter put it down wrong, but making it easier for banks to borrow money, and then providing them riskless assets to buy with it doesn’t sound like a way of increasing liquidity in the New Zealand credit market. Hopefully the RBNZ does a release soon, and explains to me how I’m an idiot, or if you’re quick maybe you can beat them to it 😉