2022-05-17

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Capital Review - Leverage Ratio in the Capital Review

The Financial Stability Office Committee proposes consulting on the inclusion of leverage ratio requirements, including both disclosure and minimum standards, within the Reserve Bank of New Zealand's Capital Review. This initiative aims to align New Zealand's regulatory framework with international standards, particularly those of APRA, while providing a non-risk-based backstop to mitigate regulatory arbitrage and deleveraging risks. The Committee concludes that the benefits of international alignment outweigh the relatively low compliance costs and potential loss of risk-sensitivity.

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Reserve Bank of New Zealand

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