WELLINGTON, March 7 (Reuters) - The Reserve Bank of New Zealand (RBNZ) said on Tuesday that it will balance the integrity of the country’s financial system with banking efficiency during a review of bank capital requirements in the coming months.
“Higher levels of capital would improve the soundness of the financial system by reducing the likelihood of bank failures,” RBNZ Deputy Governor Grant Spencer said in a speech to the New Zealand Bankers Association in Auckland, which was also published on the RBNZ website.
“However, the capital regime could reduce the efficiency of financial intermediation if ratios are pushed too high or standards are made overly complex,” he said.
The review will cover the definition of capital, the measurement of risks that the banks face and the minimum capital requirements and buffers, Spencer said.
More details will be provided in an issues paper in April, Spencer said, adding that the RBNZ aims to complete its review by the first quarter of 2018. (Reporting by Tom Westbrook, editing by G Crosse)