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MNI INTERVIEW: RBNZ Talks To Government About Green Bonds

MNI (Sydney)

The RBNZ has hired S&P Global Trucost as it considers how to green its balance sheet.

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The Reserve Bank of New Zealand has engaged S&P Global Trucost to assess the carbon intensity of its sovereign debt holdings as it considers how to "green" its balance sheet, and has already spoken to the government about potential green bond issuance, RBNZ Assistant Governor Simone Robbers told MNI.

The results of the Trucost assessment should be known later this year and should provide information on how the central bank might adjust its balance sheet and take a lead in sustainable finance, Robbers said in an interview.

"We are looking at expanding our universe of investment opportunities and balancing that with policy objects," said Robbers. "And we are looking at how we can support our own debt capital markets with sustainable initiatives using our facilities."

GREEN BONDS

The RBNZ has been talking to the government and treasury on the matter, and discussions have also touched on possible government green bond sales.

The RBNZ purchased USD100 million of the Bank for International Settlements' U.S. dollar Green Bond Fund in 2019, and is a member of the Executives' Meeting of East Asia-Pacific Central Banks which announced plans in July to purchase green bonds through the Asian Bond Fund.

The RBNZ's current main initiative in promoting green finance is a stress test for banks and insurers on the resilience of their portfolios to a range of climate risks, results of which will be announced soon, Robbers said.

Given its financial stability mandate, the central bank could potentially respond to the stress test results with macroprudential requirements around capital reserves and liquidity, she said.