RBNZ's Bank Changes Will Cost Up To $2B A Year Without Making Banks Much Safer

The Reserve Bank's proposals to double minimum bank equity levels will cost New Zealand's economy $1.5-to-$2 billion a year without making banks much safer, according to former long-serving central bank official Ian Harrison, The New Zealand Herald reported. Worse, he says the bank's decision to base its policy on ensuring that bank collapses occur only once in every 200 years happened at the last minute when it realised that its initial target of limiting bank collapses to once in every 100 years would have meant New Zealand banks already had sufficient capital to meet that test. This doubling of the time frame happened "on a whim without any consideration of the costs and benefits of the choice," Harrison says. Read more

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