Regulatory Alerts2022-05-17
Capital Review: Going concern capital requirements
The Reserve Bank of New Zealand's Financial Policy Committee reviewed feedback on its proposed 16% Tier 1 capital requirement for large banks, which aims to limit the probability of a systemic crisis to 1-in-200 years. The Committee concluded that while some model inputs were overly conservative, a holistic assessment supports maintaining the proposed ratio within the bounds of optimal calibration. This determination balances critiques of portfolio risk modelling and international literature against expert analysis confirming the net benefits of the higher capital levels.
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