Regulatory Alerts2013-04-30
Macroprudential Policy and Operating Guidelines
The Minister of Finance and the Governor of the Reserve Bank of New Zealand issued this memorandum to establish the legal framework and operating guidelines for macroprudential policy aimed at enhancing domestic financial system resilience against credit, asset price, and liquidity shocks. The agreement authorizes the Reserve Bank to deploy targeted prudential instruments, including adjustments to the Core Funding Ratio, countercyclical capital buffers, sectoral capital requirements, and loan-to-value ratio restrictions, to manage systemic risks across the macro-credit cycle. Implementation requires the Governor to continuously assess emerging risks, consult with the Minister and Treasury prior to deploying any instrument, and report on policy effectiveness and financial stability in regular assessments subject to a mandatory five-year framework review.