New Zealand’s financial system remains resilient even as global risks intensify, according to the central bank's Governor Anna Breman. In its latest Financial Stability Report released on Wednesday, policymakers noted the system is well-positioned to support households and businesses if conditions weaken. However, prolonged conflict in the Middle East is raising global financial stability risks and already weighing on the domestic economy. While growth had been recovering, the outlook has softened, with slower momentum expected to affect employment and make debt servicing more challenging. Despite these headwinds, the banking sector remains robust, supported by strong capital and funding buffers. Stress tests also indicate that banks can withstand severe economic shocks, leaving them capable of supporting customers and managing pressures from offshore funding markets.