This submission is in response to the second round of consultation on Phase 2 of the Reserve Bank of New Zealand Act review.
Written by Roger Partridge and Dr Bryce Wilkinson, this submission focuses on four issues raised in consultation documents 2A and 2B, namely:
- What high-level financial policy objectives should the Reserve Bank have?
- How should the Reserve Bank be governed?
- What prudential regulatory tools and powers should the Reserve bank have?
- How should the Reserve Bank enforce prudential regulation?
- Objectives: The purpose of all regulation, including banking regulation, should be to make the community better off than otherwise.
- Governance: We support the in-principle decision to establish a proper governance board for the Reserve bank. We have given ongoing thought to who should be responsible for monitoring the Bank as a whole. Treasury or MBIE are two department options.
- Tools and powers: We favour a standards-based approach to the core prudential rule-making power. This has the advantage of both parliamentary oversight and publication while preserving flexibility.
- Enforcement: We consider the strategic approach to prudential regulation should be a matter to be determined by the Board of the Reserve Bank. We do not consider it should be prescribed in legislation.
Download the PDF to read the full submission.