In October 2008, the Reserve Bank of New Zealand issued seven times the usual number of $100 notes. It meant one thing: without necessarily being aware of each others' actions, people had begun withdrawing their savings from retail banks, in cash.
You didn't know this. But the Bank, and the government, did, as they scrambled to respond to a rapid succession of decisions by other governments –- cascading from Ireland to Britain to Australia – to guarantee bank deposits.
"It was crucial not to make this public," writes Reserve Bank governor Alan Bollard in his book, Crisis: One central bank governor and the global financial collapse collapse.
"If word had got out, it could have added to public anxiety and triggered exactly the bank run we were so anxious to prevent … So far the media hadn't picked up anything about a run on cash but any hint of such a story could have sparked rumours about unsafe banks and become the catalyst for a bank panic."
"Phew!" it reads, between the lines.
This is far from the only part of the book where Bollard makes it clear that his job was made easier by journalists not doing their jobs too well.
The previous month, after the Reserve Bank issued what Bollard calls "an unusual press release", full of "generalities" in which it expressed confidence in the New Zealand banking system and declared it was keeping an eye on international events and "stood ready to support any liquidity measures that might prove necessary for New Zealand's financial system."
The markets accepted the statement at face value, and "[n]one of the media asked what might trigger interventions. And we had another week or two to work out for ourselves just what our response may be."
The following year, at the presentation of the May 2009 Financial Stability Report ("I had been dreading it. In my time we had never had to deliver such a grim message."), the journalists asked the wrong questions again.
"Rather than ask about the safety of the banks," writes Bollard. "They wanted to know why they had not passed on any of the latest official cash rate cuts, and what we would do about it."
Another bullet dodged.
What Bollard doesn't say is whether there were occasions when journalists did have the sniff of something, and agreed not to report it for the good of the country. Which is something I will ask him about for this week's Media7.
In general, I can say that I enjoyed Crisis, and found it extremely useful. I appreciate that Bollard chose to write the book (with Sarah Gaitanos) for a general audience, rather than, as his peers and predecessors have done, share its insights with a closer circle. I like that it's short.
It's not perfect: there are some unhelpful areas of assumed knowledge, including the international currency trade (How's it work? Who are these people? What's it for?). And there is the odd duff sentence (when Bollard says "I took a vicarious pleasure in confronting [some of his critics in the media] with their previous statements," the word "vicarious isn't really the one he's after).
But I came away from it the wiser, and I buy Bollard's contention that New Zealand got through the global crisis not only by dint of good fortune, but because of the quality of its laws and institutions. And in that, I count both the Prime Ministers and Finance Ministers who feature in the story.
There is some hint of robust debate with Cullen over conditions of entry to the deposit guarantee scheme, yet the cautious building societies and credit unions Cullen sought to protect were, in the end, the ones who deserved protection. Bollard clearly agonised about the scheme more than any other measure taken – he knew there would be a cost, he knew it would be gamed – but, in the end, settles for having fended off a collapse of the banking system.
And, finally, I do take great vicarious (yes!) delight in the role that our own David Haywood played in the drama.
"We had a light-hearted diversion at Christmas 2009. A journalist contacted me to ask if I would review a strange new book. A New Zealand blogger, David Haywood, unknown to me, apparently a fan of childhood 'boys-own' type annuals, he produced a New Zealand Reserve Bank Annual 2010. He selected what he thought was one of New Zealand's most boring establishments (the Reserve Bank) and one of Wellington's most boring establishment members (me), and subjected us to merciless satire.
"This Alan Bollard was no quiet authority figure working through the crisis, but rather a screaming, ranting madman who resorted to violence (of the armed and unarmed variety) whenever he did not get his own way. It was more like a cross between Japanese manga comics and Fear and Loathing in Las Vegas than a boys-own annual. It had instructions for kids on how to be a central bank governor (complete with a cut-out Bollard mask), a five-minute crossword puzzle on macro-economics, a poetry corner devoted to verse about the CPI, and a story called 'A Night to Remember with Alan Bollard' (armed with a softball bat).
"After all we had been through, laughter was a welcome tonic."
The journalist was Matt Nippert. Dr Bollard couldn't do the review, but I'm sure David is honoured to have been of such service to his country.
If you'd like to come along to this week's Media7 on Wednesday, we'd need you at the Victoria St entrance to TVNZ between 5pm and 5.30pm. Hit 'Reply' and drop me a line to say you're coming if possible. I should warn that Dr Bollard won't be there in person – I'm meeting him earlier in the day.