The Reserve Bank is consulting on policy proposals for new standards, and its approach to operationalising the crisis management regime in the Deposit Takers Act 2023 (DTA).
Deputy Governor Christian Hawkesby says deposit takers play a critical role in the financial system by providing products and services which are essential to New Zealanders and the broader economy. The DTA standards give us a significant opportunity to create a coherent prudential framework that is more closely aligned with international best practice.
"Using the Proportionality Framework, our policy proposals are tailored to promote financial stability and a sustainable, productive economy that is competitive, efficient and inclusive. From 2028, the standards will set the minimum requirements that licensed deposit takers (such as banks, credit unions, building societies, and finance companies) must comply with," Mr Hawkesby says.
The consultation paper released today covers proposals for the nine non-core standards, including governance, risk management and lending. This consultation follows on from our recent consultation on the four core standards (capital, liquidity, disclosure and the Depositor Compensation Scheme) which are the standards existing deposit takers will be licensed against.
"Alongside the proposed non-core standards policy, we are also seeking feedback on our initial policy direction on the new crisis management regime in the DTA," Mr Hawkesby says.
If a deposit taker gets into distress or fails, an effective crisis management regime is essential for minimising the serious economic damage and costs that can result as we saw in the Global Financial Crisis. These regimes also support a competitive and dynamic financial system where deposit takers can enter and exit efficiently.
The DTA modernises New Zealand's crisis management framework by formalising our role as the resolution authority, establishing a Depositor Compensation Scheme, and providing an additional suite of powers and tools to deal with entities in distress.
"We welcome feedback from stakeholders on both the standards and the crisis management regime in the DTA. This work will ultimately result in the issuance of standards and the publication of our Statement of Approach to Resolution," Mr Hawkesby says.
Consultation materials can be found at https://consultations.rbnz.govt.nz. Both consultations are open until Friday 22 November 2024.
