Regulatory Alerts2022-05-17
Risk Appetite Framework for Setting Bank Capital Requirements
Susan Guthrie proposes a risk appetite framework to determine New Zealand bank capital requirements under conditions of uncertainty. The framework defines a policy goal of capping the probability of a crisis at 1% or less while exploiting opportunities to increase stability and output. The memorandum recommends that the Banking Steering Group agree to seek Financial Stability Office approval for this approach to guide and communicate capital decisions.
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