New Zealand: Financial Sector Assessment Program: Detailed Assessment of Observance-Basel Core Principles for Effective Banking Supervision
IMF Staff Country Reports, May 10, 2017
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- New Zealand: Financial Sector Assessment Program: Detailed Assessment of Observance-Basel Core Principles for Effective Banking Supervision
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Bibliographic details
- Published: May 10, 2017
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781475599930.002
Assessment summary
- Presents an assessment of Observance of the Basel Core Principles for Effective Banking Supervision (BCP) in New Zealand.
- The supervisory approach of the Reserve Bank of New Zealand (RBNZ) reflects the characteristics of the local banking industry and the authorities’ goal to limit moral hazard by relying on market discipline and not offering deposit insurance.
- Banks offer traditional products in a highly concentrated market.
- Since the most recent Financial Sector Assessment Program, the RBNZ has increased attention to strengthening regulatory discipline.
- The current approach to supervision is limited by the heavy weight the RBNZ places on market discipline compared with regulatory discipline.
- Better compliance with the BCP and enhanced effectiveness of the RBNZ three-pillar approach are recommended.
Key findings and thematic observations
- Heavy reliance on market discipline is a central feature of RBNZ’s supervisory approach.
- RBNZ has taken steps to increase regulatory discipline since the prior FSAP.
- The banking market is highly concentrated and offers traditional products.
- Identified limitations arise from the balance between market discipline and regulatory discipline under the RBNZ approach.
Policy recommendations and implications
- Improve compliance with the Basel Core Principles for Effective Banking Supervision (BCP).
- Enhance the effectiveness of the RBNZ three-pillar approach to supervision.
Subject classification and keywords
- Subject: Bank supervision, Banking, Capital adequacy requirements, Credit risk, Financial regulation and supervision, Liquidity risk, Market risk, Operational risk
- Keywords: Australia and New Zealand, Bank supervision, banking group, CR, credit risk, Credit risk, disclosure statement, Global, incorporated bank, ISCR, Liquidity risk, Market risk, Operational risk, registered bank, risk management, risk profile, senior management
Content in this bundle
- Country Report