The half-yearly Financial Stability Report from the RBNZ highlights an issue banks will need to manage whenever demand for credit picks up.The Reserve Bank of New Zealand wrote in the report that "developments in global funding markets remain a key risk for the banking system". It goes on to review the options open to banks "should offshore term debt markets be disrupted again", as they were in the second half of 2011.Using a "scenario where global term markets are effectively closed to New Zealand banks for a prolonged length of time", the RBNZ assumes banks would be able to replace some, but not all, expiring term wholesale funding.Should credit demand pick up significantly "banks would find it difficult to respond by quickly increasing core funding [and] retail deposit rates could be bid up further if banks compete vigorously for that source of funding," said the RBNZ. The RBNZ noted that, in present market conditions, funding, while available, was "still expensive".As reported last week, the RBNZ has now set a date for the increase in the minimum "core funding" requirement to 75 per cent, from 70 per cent, from the beginning of next year.