Regulatory Alerts2022-05-17
M-Capital-Ratio
Dr. Martien Lubberink submits comments on the Reserve Bank of New Zealand’s Capital Review Paper 4, arguing that the proposed framework leaves the financial system vulnerable to significant shocks. The author criticizes the regulator's narrow focus on Common Equity Tier 1 and lack of Pillar 2 supervision, warning that the required $25 billion equity increase is impractical for the domestic market. Lubberink recommends adopting contingent convertible capital instruments and a layered capital structure to better address operational risks and ensure systemic resilience.
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