Regulatory Alerts2022-05-17
Non-technical Summary: How much capital is enough
The Reserve Bank of New Zealand proposes to almost double the required high-quality capital levels for banks to reduce the risk of financial failure. This regulatory change aims to protect depositors and society by ensuring banks can withstand severe economic shocks, with an expected capital increase of 20 to 60 percent. While higher capital requirements may slightly increase borrowing costs and reduce returns for owners, the Reserve Bank argues these impacts are minimal compared to the benefits of a safer banking system.
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