Bank workers' union Finsec is calling for a modernisation of New Zealand's monetary policy in light of the International Monetary Fund's report, Rethinking Macroeconomic Policy, which seriously questions the basis of current policy.

"The 1980s Roger Douglas model of monetary policy focused solely on interest rate setting to lower inflation is long overdue for review," said Finsec spokesperson Andrew Campbell. "The IMF report shows that the global financial crisis should inspire a rethink of current policy settings.

"Government and their policy bureaucrats seem to be stuck in the past and are seriously out of step with thinking internationally. A review that leads to the Reserve Bank being given a wider range of regulatory tools could achieve better results for everyone," said Campbell.

"The global financial crisis highlighted the limitations of current policy and showed the real benefits of fiscal policy and regulation in resolving targeted problems. Targeted tools can be used to resolve specific problems in the economy."

"Our fluctuating exchange rate, inadequate financial sector regulation and high unemployment could be better addressed through targeted measures. All New Zealanders could benefit from a change" said Campbell. "The current system puts ideology ahead of positive outcomes. Modern thinking and fresh ideas are urgently needed."

"If the government chooses to ignore this report and retain the existing monetary, fiscal and regulatory policies, it is likely to lead to serious ongoing problems for New Zealand," said Campbell.