Taiwan just imposed a capital inflow ban on foreign funds inflow into Taiwan.
All foreign capital into Taiwan term deposit is illegal. This is to stop foreign "hot money" into Taiwan causing the Taiwan Dollar to rise...maybe RBNZ should be more courageous like the Taiwanese....stop talking and swing the BIG STICK !!!

If it is an effective measure (& I agree there will be all sorts of loopholes & ways around it), to a degree it is a pity - productive enterprises will be starved of foreign capital which is vital for expansion.

Just not enuf capital in NZ for capital expansion etc. However, since in NZ we only import money to pump up housing & land values, then I suppose it has to be done. We must the world champions at shooting ourselves in the foot.

Wally, Philly - good points. Without real effective policy change, better tools, we are left with half-way houses and bodging. Still, at least AB is trying with what he does have available, I'm just surprised our inflation hungry goverment haven't tried to pee on his parade yet. Time will tell. Hang on, what's that sound:

http://www.youtube.com/watch?v=eQ-KZyniB4c&feature=related

Taxation reform will also be key to making Bolly's strategy work. Specifically cutting out the various tax rorts favouring property & disfavouring productive invesmtent. I still have hopes for reform there, tho the performance of the Nats to date doesn't give much confidence....

@Wally
Care to share some examples of how the banks will get around such rules?

"The financial stability report released yesterday shows that New Zealand banks still import more than 40 per cent of the funds they lend"(herald) ....that's great news isn't it?....40%....so what happens when those lending the loot up the anti and raise the price?...Aint no way the banks can get that 40% on the local market because it just does not exist...they are trapped by their own greed for mortgage market share and fat profits. If AB gets permission to implement his new tools and that is very very doubtful...the banks will need to buy buckets of red ink. The odds are the banks will tell the govt what is going to happen and the govt will get the spin doctors to put some gloss on a statement the RBNZ will be allowed to make a few months from now which will see the April startup for the new tools delayed until October and so on and so on.

Simple problem Bill..40% of funds used by banks are borrowed offshore...there is no way the banks can replace this with deposit money in NZ...so expect the startup date of April 2010 (already move out from the end of 2009) to be pushed out yet again and again. The banks will be allowed to set up 'special vehicles' into which foreign loot will flow and then that loot will be deposited in the bank account before being multiplied by 10 and loaned out to keep the property ponzi scheme running. The govt has no intention of ending the property bubble because the economy will not let them. If by mistake something was done to trigger a collapse..the balance sheet impact for the banks would set in train a total failure of the whole economy...this is the message being drummed into the Cabinet...they have no bloody choice in the matter. Consequently the so called 'strategy' is nothing but humbug and the TWG report will be buried.

Well put. If you stop the pump on the bouncy castle, it rapidly loses shape.

Wally is quite right. Internationally, there is plenty of bank experience of using offshore Structured Investment Vehicles to circumvent capital adequacy rules. The same will happen here. In fact, smaller (local) banks like SBS and TSB will suffer the most, as unlike the Aussie four, they lack the funds, personnel and scope to set up such SIVs.

The RBNZ cannot possibly contain the housing bubble alone - a coordinated policy response is essential (but politically difficult). I've said before, the ball is in Phil Gough's court- he needs to pledge Labour support for a National tax reform (LAQC abolishment, plus land or capital gains taxes on residential second properties).

Les...AB is not able to make decisions without running ideas past the Cabinet. Those muppets are being jerked around by the big banks. The game is what it's all about Les. What state this pigsty economy is in when the game ends is up to the banks.