Regulatory Alerts2022-05-17
Reserve Bank of New Zealand Response to Basel Committee Proposals on Banking Resilience and Liquidity
The Reserve Bank of New Zealand submitted comments to the Basel Committee regarding proposals to strengthen banking sector resilience and liquidity standards. The regulator opposes a mandatory minimum leverage ratio for all banks, arguing it is poorly targeted and misleading, while advocating for greater national discretion in defining liquid assets for the Liquidity Coverage Ratio to accommodate small economies. Additionally, the submission highlights concerns regarding pro-cyclicality in risk models and calls for a review of correlation coefficients in the Internal Ratings-Based framework.
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