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WELLINGTON — The Reserve Bank of New Zealand (RBNZ) has proposed reducing minimum capital requirements for deposit-taking institutions, following criticism that current regulations have constrained credit availability and increased borrowing costs.
The proposal, announced as part of a broader review of the country’s capital framework, aims to strike a balance between financial system stability and economic efficiency. Critics, including government officials and industry stakeholders, argue that the existing capital settings—introduced in 2019 and being phased in through 2028—are overly conservative and may be dampening competition and growth.
RBNZ Governor Christian Hawkesby emphasized the importance of maintaining depositor protection while supporting a more dynamic lending environment. “It’s essential we strike the right balance—protecting depositors and the wider economy, while supporting competition and economic efficiency,” he said.
The central bank has opened consultations on the proposed changes and expects to reach a final decision by the end of the year.
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