Crisis a headache for Reserve Bank governor

The global economic crisis proved a literal headache for Reserve Bank governor Alan Bollard, who for the first time suffered debilitating migraines that sent him to bed for days on end.

Dr Bollard makes the revelation in his new book Crisis, an insider's account of the global financial meltdown, from the collapse of investment banks and the credit crunch to the fragile recovery now under way.

The day after slashing interest rates in September 2008, he "crawled home, shut the curtains in the bedroom, swallowed more painkillers, pulled a pillow over my face and tried to sleep.

"There I stayed through Friday and Saturday, waiting for the infernal throbbing behind my ears to abate and gloomily contemplating what might lie ahead – but not imagining what was then unfolding on Wall St".

But as the worldwide crunch has eased, so have the headaches. He has not suffered from them since.

His book is also a personal catalogue of the recession's impact on bank staff, colleagues and himself – from the migraines to long trips to world central bank conferences, almost always alone.

Dr Bollard gives a rare insight into the level of concern, not always obvious to the public, during the crisis. But he said New Zealand escaped relatively lightly and he never thought that its economy or banking system was close to cataclysm.

"A lot of them [other bankers] had a heap worse than we did, I did. If things had been really bad here, I probably wouldn't have ended up writing a book like this. We observed a lot of that, thankfully, and didn't experience it all."

He said he was an introvert who at times of pressure preferred his own company and to paint landscapes rather than socialise.

"There were some lonely moments. It's not physical loneliness, but you can't actually share some of your deeper worries that easily. You have got to be really careful what you say to people."

He had to suffer angry letters and even a death threat, as people took issue with his rates rise.

Although the crunch took its toll on staff, he believes New Zealand came through it in relatively good shape, partly due to its sound banking system but also because local media did not overplay the crisis.

Dr Bollard said a run on $100 bills in 2008, as people pulled money out of banks to stuff under the mattress, was "a pre-panic, it wasn't actually a full panic". But it was like the canary in the mine of the crisis.

The bank would monitor such runs in future and react if necessary. He remains confident the worst is now over, although the recovery is likely to be slow.

His next official take on the economy – hopefully migraine-free – will be issued within a fortnight.

- © Fairfax NZ News