Bollard warns of economic risks to NZ

"Despite progress in reshaping regulatory frameworks, financial systems in many countries remain under stress due to an overhang of private and public debt."

He said markets have been especially concerned about the sovereign debt situation in Greece and the possibility of problems spreading to other European countries, and that this had made access to offshore debt harder for New Zealand banks.

"In New Zealand, households and businesses have been containing debt, which has helped to reduce the country's overall external imbalance. However, these efforts have been offset, in part, by rising levels of public debt."