Reserve Bank issues consultation paper

The Reserve Bank today released a Consultation Paper on policy options for liquidity requirements for the non-bank deposit taking (NBDT) sector. The policy options outlined are aimed at decreasing liquidity risk in the deposit-taking sector, which includes finance companies, building societies and credit unions.

Liquidity requirements (ability of an NBDT to meet its financial obligations) form part of the NBDT prudential regulatory regime that the Reserve Bank is progressively introducing to help improve the future resilience of New Zealand's NBDT sector. The regime also includes capital adequacy requirements, related party restrictions, risk management requirements, and credit rating requirements.

Comments and responses to the questions raised in the Consultation Paper should be submitted to the Bank by 15 March 2010. The intention is to make policy recommendations to Cabinet in the second quarter of 2010.

The consultation paper and information on the NBDT prudential regulatory regime can be accessed on the Bank's website (www.rbnz.govt.nz).