Banks May Face New Safety Regulations

November 11, 2008 International Finance  No comments

According to statements made by Reserve Bank Governor, Alan Bollard, the Reserve Bank is talking to commercial banks about possible new funding and liquidity standards.

While releasing the bi-annual Financial Stability Report, Alan Bollard disclosed the proposed new policy which is aimed at creating incentives for banks to diversify their reliance on funding sources. Primarily it is aimed at reducing the use of short-term wholesale as a source of funding, so as to reduce the bank’s exposure to market disruptions.

In the statement Alan Bollard maintained that he is positive about the state of the New Zealand financial system, despite the seeming financial turmoil that can be seen throughout the world’s financial institutions. He went on to say that the Reserve Bank would continue to implement measures in New Zealand to aid with financial stability.

The exact details or plans of what these new regulations and standards will consist of were not released at the conference.