The Reserve Bank has taken the unusual step of issuing a statement reassuring the public of the soundness of New Zealand's banking system in the wake of global market turmoil. It has also announced two new measures to ease liquidity pressures in the money markets. (Updated to include details on new liquidity measures). Reserve Bank Governor Alan Bollard said disruptions in the US markets are reverberating around the world. New Zealand banks are not directly involved, although there are indirect adverse effects on liquidity in New Zealand's financial markets, he said. "Financial prices have become volatile and, with heightened uncertainty, investors are becoming more risk averse," Bollard said."While New Zealand will inevitably feel the effects of major financial shocks such as this, New Zealand banks are not involved in the sort of complex financial transactions that have caused significant losses in many of the large global institutions. Meanwhile the central bank announced two new measures to ease liquidity pressures. The Reserve Bank said it planned to make it easier to inject funds into the banking system by accepting bank paper in its daily market operations. "While bank paper is already eligible for use in our standing facility, it has not been accepted to date in the Bank's open market operations," said Reserve Bank deputy governor Grant Spencer. "This measure should take some pressure off the FX swap market which is the usual channel for injecting Reserve Bank funds," he said. "It is our intention to offer longer terms than usual in our operations, up to six months, in order to help ease pressure at the short end of the market." Secondly the Reserve Bank said it planned to introduce a new facility to accept certain Asset Backed Securities (ABS) as collateral in its domestic liquidity facilities. Previously the Reserve Bank was considering residential mortgage backed securities, but was now looking at other asset backed securities such as agricultural, business or credit card debt. "This is intended to further broaden the range of assets and institutions that have access to Reserve Bank liquidity. The proposed terms for this facility will be released separately and will be subject to industry consultation before they are finalised," Spencer said.