RBNZ Details Efforts to Boost Competition
Today the Reserve Bank of New Zealand, Te Pūtea Matua appeared before the Finance and Expenditure Committee (FEC) for their banking inquiry and discussed the wide range of initiatives underway to support and improve competition in the banking sector.
Chair Neil Quigley, Acting Governor Christian Hawkesby, Director Prudential Policy Jess Rowe, and Financial Stability Adviser Charles Lilly appeared before the committee.
The RBNZ’s statutory purpose is to promote prosperity and wellbeing for all New Zealanders. This is achieved through its three core objectives: price stability, financial stability and central banking, which includes managing monetary policy, overseeing payment systems and ensuring access to cash. Competition is important across all these objectives.
“We have never had more focus on competition across our functions, including addressing the recommendations of the Commerce Commission’s market study” Mr Hawkesby said.
Key initiatives likely to support competition include developing proportionate prudential standards, launching the depositor compensation scheme, expanding access to the payments system, investigating a digital currency and working with CoFR partners on system-wide issues such as a payments vision for New Zealand.
“Advancing competition and innovation in the financial sector is a team effort across government agencies, regulators and the industry itself,” Mr Hawkesby said.
The RBNZ’s submission to the FEC outlines that the greatest gains to be made are through advancing open banking, customer data rights, digital identity, and the retail payments infrastructure to deliver an eco-system where competition can flourish.
“Through our consultation on the new Deposit Takers Act and submissions to the FEC, we have heard the claims that our bank capital regime is unreasonably conservative, and that it is undermining competition and growth in the New Zealand economy. We think that some of those claims are incorrect, but most of the claims can be tested empirically.
“The Reserve Bank Board has agreed to an evidence-based review of key aspects of our deposit takers capital settings, utilising international experts and assessing it against the regimes in other countries.” Professor Quigley said.
The full opening statements from Mr Hawkesby and Professor Quigley can be read below.
What is capital?
Capital is the buffer that allows a bank to absorb losses while still being able to pay its depositors and other creditors in full
What will the review cover?
The Reserve Bank intends to conduct a reassessment of key capital settings. We intend to engage independent international experts to support this process.
The review will build on work currently underway to review more granular risk weights for residential mortgages and corporate (including rural) lending, community housing and whenua Māori lending, as well as development of a new crisis management framework. The review will expand the work programme to include consideration of additional evidence and the calibration of other foundational aspects of the regime including:
What does this mean for the planned increase in capital requirements on 1 July?
Opening remarks to Finance and Expenditure Committee
https://www.rbnz.govt.nz/hub/news/2025/03/rbnz-outlines-work-to-support-competition