My two cents on Ross Levine’s expert report: deep thinking on incentives, dynamics, and moral hazard.

Last week, the RBNZ released the three independent international experts’ assessments of the New Zealand Capital Review. The RBNZ commissioned three international experts in May as part of the bank capital review. The reports by Cummings, Miles and Levine offer interesting views on bank capital. The reports are different in substance and style. However, they… Read More My two cents on Ross Levine’s expert report: deep thinking on incentives, dynamics, and moral hazard.

The international financial institution that the RBNZ ignored

Yesterday, the RBNZ announced the release of submissions on the last capital review paper. A whopping 161 submitters shared their views on the Reserve Bank’s capital proposals. This is significant for sure. It also confirms how interesting bank capital regulation is! I quickly found my own contributions. Three this time, but I wonder why the… Read More The international financial institution that the RBNZ ignored

The wisdom of crowds

The idea that financial markets are efficient is fascinating. A compelling story about market efficiency is the one about the Space Shuttle Challenger disaster. The Challenger broke apart within minutes after its launch on 28 January 1986. I remember it very well. It was a cold day, I was in Groningen, the Netherlands. I cycled back home… Read More The wisdom of crowds

Are the Reserve Bank capital plans really about conduct risk?

Today, I submitted my comments on our Reserve Bank’s 4th capital consultation paper. The RBNZ wants banks to meet stiff new capital requirements. For common equity, the ratio requirement will increase by a whopping 5 percent, with a 1.5 percent countercyclical buffer requirement on top. Total capital requirements will be 17 percent. There will be… Read More Are the Reserve Bank capital plans really about conduct risk?

RBNZ takes position on bank capital

Orr’s monologue on bank capital at the Financial Stability Review presentation this week was a freshening surprise. No longer the wallflower of kiwi prudential supervision, Orr elevated bank capital to the top spot of priorities. Reinforcing Orr’s FSR rant monologue, the reserve bank published a short and clear speech, announcing its position on bank capital: “… New… Read More RBNZ takes position on bank capital

Has the reserve bank become too philosophical about bank capital?

“You guys are little bit philosophical: the Netherlands and France are the only two countries in Europe that haven’t taken a position on capital requirements.” That was Emil from Nomura, who, in early 2012, queried me about the Dutch position on minimal capital requirements. The Swedish bank authorities had just announced that capital ratios should be… Read More Has the reserve bank become too philosophical about bank capital?

When will the RBNZ admit its capital ratio definitions are bent? (And copy APRA’s plan to straighten them?)

Once in a while I meet bankers and bank regulators, sometimes over a cup of coffee, sometimes over a glass of Pinot Noir. In fact, I will attend an event with RBNZ’s Adrian Orr tomorrow. He will speak at the brand new PwC centre in Wellington. When it comes to bank capital, the narrative shared… Read More When will the RBNZ admit its capital ratio definitions are bent? (And copy APRA’s plan to straighten them?)

RBNZ launches The Dashboard: an innovation in prudential bank disclosures

In a dash for more transparency, the Reserve Bank launched the Bank Financial Strength Dashboard. This is a truly innovative on-line tool for sharing prudential and financial information on New Zealand banks. The Dashboard contains more than 100 individual metrics on the financial strength of banks. The RBNZ updates the information every quarter. A world standard for bank disclosures? Compared to… Read More RBNZ launches The Dashboard: an innovation in prudential bank disclosures