Just noticed this announcement from the Reserve Bank of New Zealand, which decided to further delay the start of increases in bank capital until … drumroll … 2022. This to allow banks continued headroom to respond to the effects of the COVID-19 pandemic and to support the economic recovery.

The announcement includes an indicative timetable for the increase of capital buffers. However, the “exact dates for implementing these increases will be confirmed by the Reserve Bank in 2021.”

The new delays were predictable: a year in bank regulation is short. Moreover, capital ratios are expected to decline over the next years, which will make it harder for banks to follow the original time-table. It will just take banks longer to catch up.

I commend the RB for announcing the delay, however, it would be even more commendable if the RB showed a stronger commitment. Investors want to move on and want certainty. Alas.

A fair phase-in period would delay the entry into force of the capital plans until banks have returned to a steady-state situation comparable to December 2019. Despite yesterday’s vaccine breakthrough, it may take a while before we are back to pre-Covid19 levels.