It is time for cool heads from all parties involved with the Reserve Bank’s proposal to increase bank capital requirements, National’s Finance spokesperson Paul Goldsmith says.
“The Reserve Bank’s proposed increase in bank capital requirements could have significant economic consequences. There is a legitimate debate about how far and how fast the capital requirements should be extended.
“Remarkably, in relation to the threat of banks withdrawing lending from New Zealand, Reserve Bank Governor Adrian Orr went as far to tell the banks: ‘knock yourselves out’.
“There is a risk that such comments could be seen as cavalier. The farmer or small business owner who is struggling to refinance might be a little less bullish than the Governor.
“It’s time for cool heads.
“The Minister of Finance needs to assure himself that the Reserve Bank’s proposals are in the best interests of New Zealand’s economy and will not further slow the economy down.
“Reserve Bank independence on setting interest rates is clearly outlined in statute and well understood. That independence is not so clear when it comes to the regulatory side of the Reserve Bank’s remit.
“The Treasury has advised Grant Robertson he should ‘be comfortable that financial stability interests are being served by the capital regime without undue costs being imposed on participants in the economy’.
“We agree. It’s not good enough for the Minister of Finance to wash his hands and say this is purely a matter for the Reserve Bank. He should insist on clear evidence that the pace and extent of increases to capital requirements are appropriate.”