So, why has the RBNZ’s balance sheet become such a behemoth? Reserve Bank governor Adrian Orr is at the helm of the central bank as it starts shrinking the size of its massive balance sheet. This will shrink the size of the RBNZ’s balance sheet, making it more palatable for it to print money again in a future crisis. Building of foreign reservesThe second reason why the RBNZ’s balance sheet has grown is because of something entirely different. A larger balance sheet means it’s more exposed to interest rates and foreign exchange rates changing.

Source: New Zealand Herald May 13, 2024 00:41 UTC