Reserve Bank governor Alan Bollard told the jobs summit in Auckland today he was ready to lower interest rates further if that was necessary to combat the impact of the international recession.
"We are facing the biggest destruction of global wealth the world has ever seen," Dr Bollard told participants.
He said New Zealand's banking sector was sound, but he issued a warning.
They had made good profits in the good times, and they were expected to help out in the bad times.
Dr Bollard said the banks should not underestimate the level of corporate anger that existed because of the onerous lending conditions imposed on businesses.
He urged the banks to lend, but to be sensible in doing that.
Both Dr Bollard and Treasury secretary John Whitehead painted a grim picture of the economic recession.
Dr Bollard estimated that around the world the amount of wealth destroyed included $2 trillion in credit, $30 trillion in equity markets, $4 trillion in housing and $3 trillion in lost output.
He said the response to this around the world had been massive expenditure, unlike anything seen since World War 2.