Regulatory Alerts2025-12-16
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Comments on the Proposed Review of Capital Settings
Elena Carletti and Brunella Bruno submit comments on the Reserve Bank of New Zealand's proposed 2025 review of capital settings, which aims to reduce requirements to stimulate growth. The authors caution against relaxing prudential standards given New Zealand's fragile banking system, limited crisis management tools, and exposure to external risks. They argue that maintaining robust capital buffers is essential for financial stability and sustainable lending, warning that lower requirements may increase systemic vulnerability and fiscal costs.
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