“Nothing's too big to fail” – Reserve Bank governor

He also calls for more fiscal stimulus in NZ and Australia

“Nothing's too big to fail” – Reserve Bank governor

Reserve Bank governor Adrian Orr has warned the big four Australian-owned banks in New Zealand that “nothing’s too big to fail,” Stuff.co.nz reports.

In an interview with the Australian Financial Review in Jackson Hole during the annual meeting of the world’s central bankers, Orr showed concern about the stability of the big four Australian-owned banks.

“There’s always been a concept: too big to close. [But] nothing’s too big to fail,” he said, as reported by Stuff.co.nz.

He also predicted that if one of the big four banks were to close, the remaining three banks would go down with it.

Read more: New Zealand economy will get worse before it gets better

Orr is also calling for more fiscal stimulus in New Zealand and Australia as central banks in both countries cut interest rates to improve the economy.

He commented that there had been so much discussion about low interest rates but not much for fiscal policy.

"What didn't I hear? Very little if no discussion around the role of fiscal policy," Orr said.

"...This is a time for the other significant lever of economic management to be doing its job, particularly when there are such obvious jobs to be done around the infrastructure deficits, the skills that are needed, health, welfare, demographics, ageing.”

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