Regulatory Alerts2022-05-17
Capital review - Role of buffers in capital framework
The Reserve Bank of New Zealand's Financial Policy Committee recommends maintaining the current capital framework while increasing reliance on capital buffers rather than raising hard minimum requirements. This approach leverages buffers as flexible regulatory tools to enhance bank resilience and support lending during stress without triggering severe supervisory consequences associated with minimum ratio breaches. The decision aligns with Basel III principles to mitigate pro-cyclicality and ensures the banking sector acts as a shock absorber for the broader economy.
Share