Regulatory Alerts2022-05-17
In-principle decisions on the denominator framework
The Reserve Bank of New Zealand’s Financial Policy Committee seeks FSO approval to retain internal models for credit risk while imposing stricter constraints to address transparency and complexity concerns. The proposed reforms require IRB banks to use standardised approaches for externally rated exposures, implement dual reporting of capital ratios, and apply a capital output floor to limit risk-weighted asset variability. Additionally, the Committee recommends replacing the advanced measurement approach for operational risk with the Basel standardised approach to enhance consistency and reduce regulatory burden.
Share