Regulatory Alerts2021-12-18
Capital Review Consultation Paper 4: How much capital is enough? - Response to submissions
The Reserve Bank of New Zealand issued this document to summarize its final decisions and responses to submissions regarding the fourth consultation paper of its Capital Review. The Reserve Bank defended its proposed 16 percent Tier 1 capital requirement for locally incorporated banks, arguing that current levels are insufficient given the costs of financial crises. The response addresses stakeholder concerns regarding the problem definition, the methodology for cost-benefit analysis, and the distinct roles of capital requirements versus deposit insurance.
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