Photo: RNZ
- Reserve Bank sets up new committee to run financial stability policy
- Financial policy committee to set bank finance levels, lending limits
- Recent select committee report recommended such a committee
- RBNZ board and executives to be majority, but also two external members
The Reserve Bank New Zealand has formed a new committee to make key decisions around financial stability.
The Financial Policy Committee (FPC) will set prudential requirements for financial bodies regulated by the central bank, and also decide on mortgage lending policies such as debt-to-income and loan-to-value ratios.
"The creation of the FPC will strengthen financial policy-making at the RBNZ, with greater focus and expertise brought to bear to make sure that the New Zealand financial system remains strong and stable," Deputy Chair Rodger Finlay said.
The FPC will consist of the RBNZ board chair, the governor, and three other RBNZ board members, and up to two external members.
The move is in line with recommendations from the Finance and Expenditure Committee's recent inquiry into banking competition, and Findlay said it followed consultation with Treasury and the government to bring better expertise and experience to decision making.
"A committee with formal policy decision-making authority from the RBNZ Board and credible external experts was seen to achieve this outcome."
Decisions on fiscal responsibility has previously been made in-house by RBNZ staff under a deputy governor.
In the face of industry criticism from the four major Australian owned banks - ANZ, ASB, BNZ, and Westpac - and smaller banks, as well as political and business pressure, the RBNZ has already moved to look at how much capital banks should be required to hold.
A decision was expected by the end of the year.
The new committee will be overseen by the RBNZ board, and should operating by early next year.
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
