Regulatory Alerts2022-05-17
Reserve Bank of New Zealand Regulatory Impact Assessment on Core Funding Ratio Increase
The Reserve Bank of New Zealand proposes increasing the minimum Core Funding Ratio for locally incorporated banks from 65 percent to 70 percent to address liquidity market failures and moral hazard exposed by the global financial crisis. The assessment rejects maintaining the status quo or adopting the more complex Basel Net Stable Funding Ratio, concluding that the proposed increase aligns with current bank practices and imposes negligible compliance costs. This regulatory change aims to strengthen the resilience of the New Zealand banking system against liquidity shocks while maintaining alignment with international supervisory standards.
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