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Release date
19 December 2019

The Reserve Bank of New Zealand has released background materials and papers to its final decisions on the Capital Review, along with its response to submissions on the fourth and final consultation paper, How much capital is enough?
Stakeholder feedback and insights were important to shaping the Reserve Bank’s Capital Review, Deputy Governor Geoff Bascand says.
“There was significant and wide-ranging interest in this consultation, with written feedback from 161 submitters, along with feedback from analysts and other interested parties who did not make a formal submission.”
The Reserve Bank engaged with a diverse range of stakeholders throughout its consultation process including banks, industry groups and businesses, the rural

Release date
18 December 2019

The Reserve Bank welcomes the Government’s decisions on its future role and responsibilities as part of Phase 2 of the review of the Reserve Bank of New Zealand Act.
As announced, changes to the legislative framework will be made through enacting two separate Acts to replace the Reserve Bank of New Zealand Act 1989 – an ‘Institutional Act’ and a ‘Deposit Takers Act’.
Under the Institutional Act the Reserve Bank’s main objectives will be:
achieving and maintaining stability in the general level of prices over the medium term and supporting maximum sustainable employment; and
protecting and promoting the stability of New Zealand’s financial system.
Other key decisions relate to the establishment of a governance board and the

Release date
12 December 2019

The annual re-weighting of the Trade-Weighted Index (TWI) takes effect on Friday 13 December 2019.
The TWI is a measure of the value of the New Zealand dollar relative to the currencies of New Zealand’s major trading partners. There are 17 currencies included in the TWI and each currency is weighted using the country’s two-way goods and services trade with New Zealand.
The new weights will be applied going forward. The historical calculations of the TWI are not backdated with the new weights. The current TWI weights and those that will apply for the next 12 months are:

Currency

Symbol

Old weight

New

Release date
12 December 2019

The first of two Section 95 reports requested from ANZ New Zealand (ANZ) has been completed with the findings showing that further improvements are required to ANZ’s director attestation processes.
In June 2019 the Reserve Bank requested a report on ANZ’s Director Attestation and Assurance framework, under section 95 (s95) of the Reserve Bank of New Zealand Act 1989. ANZ engaged Deloitte, with the approval of the Reserve Bank as per s95, to prepare the report and the Reserve Bank has required ANZ to publish a summary of the findings.
The Reserve Bank requested the report following concerns about:
ANZ’s directors attesting to compliance despite ANZ’s failure to use an approved Operational Risk capital model as required by the

Release date
06 December 2019

The Reserve Bank is alerting the public of what appears to be an automated phone call scam randomly targeting members of the public.
The scam call, purportedly from the Reserve Bank, plays a pre-recorded message saying that the receiver has “an important customer message from the Reserve Bank of New Zealand.” If the receiver stays on the call, a real person takes the call on the other end and proceeds to start talking in a foreign language.
This phone call is not from the Reserve Bank. The Reserve Bank does not call individual members of the public. We recommend not following any instructions from the caller, and to hang up and not attempt to call the number back.
Visit CertNZ’s Scams and Fraud web page for more information about

Release date
05 December 2019

The Reserve Bank of New Zealand today released its final decisions following its comprehensive review of its capital framework for banks, known as the Capital Review.
Governor Adrian Orr said the decisions to increase capital requirements are about making the banking system safer for all New Zealanders, and will ensure bank owners have a meaningful stake in their businesses. The changes will be implemented over seven years, giving plenty of time for banks to manage a smooth transition and minimise any adjustment costs.
“Our decisions are not just about dollars and cents. More capital in the banking system better enables banks to weather economic volatility and maintain good, long-term, customer outcomes,” Mr Orr says.
“More

Release date
29 November 2019

The Council of Financial Regulators (CoFR) has announced its work priorities for the coming year.
The work programme includes seven separate work streams, each led by one of the CoFR agencies, but involving all the members (alongside other government agencies as necessary) in a coordinated effort to tackle issues that reach across the financial system.
The CoFR work streams are as follows:
Climate change (led by Reserve Bank of New Zealand) – to facilitate a smooth transition to a low-carbon and climate-resilient economy, while supporting the soundness and efficiency of the financial system.
Financial Inclusion and Consumer Engagement (led by Commerce Commission) – to coordinate the work of CoFR members to improve consumers’

Release date
27 November 2019

Financial system vulnerabilities remain elevated and more effort is required to ensure that the system remains resilient over the longer-term, Reserve Bank Governor Adrian Orr says in releasing the November Financial Stability Report.
International risks to the financial system have increased. Global growth has slowed amid continued uncertainty about the outlook for world trade. This has resulted in reductions in long-term interest rates to historic lows, including in New Zealand. While necessary to maintain near-term inflation and employment objectives, prolonged low interest rates can promote excess debt and investment risk-taking, and overheat asset prices, Mr Orr says.
Mr Orr noted that the Reserve Bank’s Loan-to-Value Ratio

Release date
25 November 2019

The Reserve Bank of Australia hosted Governors from South Pacific Central Banks[1] on 19–20 November in Sydney on the occasion of the 34th South Pacific Central Bank Governors’ Meeting[2].
Following constructive and detailed discussions, Governors agreed the following:
as a collective, to prioritise an initial focus on a regional Know Your Customer (KYC) framework
this framework would cover governance, technical and legal requirements in each jurisdiction
that the International Monetary Fund would perform the Secretariat role for the KYC work program
longer term, to seek service providers to operate within the framework.
The second day of the meeting was expanded to also include discussions by the Network for Greening

Release date
20 November 2019

The Reserve Bank of New Zealand is working closely with regulatory counterparts following an announcement about alleged systemic AML/CFT breaches by Westpac Banking Corporation in Australia.

AUSTRAC has applied to the Federal Court of Australia for civil penalty orders against Westpac Banking Corporation in Australia. The civil penalty orders relate to alleged systemic non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) in Australia.

Deputy Governor and Head of Financial Stability Geoff Bascand said the Reserve Bank of New Zealand was made aware of AUSTRAC’s actions and is in close contact with counterparts across the Tasman in relation to this issue.

“We have a regular onsite

Release date
19 November 2019

The Reserve Bank has increased its supervisory monitoring of the Bank of New Zealand (BNZ) and applied precautionary adjustments to its capital requirements following the identification of weaknesses in BNZ’s capital calculation processes.
BNZ identified a number of errors while undertaking a programme of remediation, which began in early 2018 and is expected to continue into 2020. These included three capital calculation errors, which resulted in misreported risk weighted assets over a number of years.
It is now required to increase the risk weight floor of its operational risk capital model from $350 million to $600 million capital. The $250m increase is a supervisory capital overlay.
The Reserve Bank requires banks to maintain

Release date
14 November 2019

The Reserve Bank has created a new Auckland-based Assistant Governor position to lead the Bank’s ambitious growth and transformation work, and further develop its people and culture.
The new role – Assistant Governor/General Manager, Transformation and People – will be based in the Bank’s Auckland office. It will be responsible for all people and culture, growth and transformation work, as well as building the Bank’s Auckland presence.
Governor Adrian Orr says the structural change will support the Bank’s growth and transformation plans, particularly in Auckland.
“As we explained in our Statement of Intent, we have a vision of ‘Great Team, Best Central Bank’. This means growing our Auckland presence, better connecting with our

The Monetary Policy Committee has decided to keep the Official Cash Rate (OCR) at 1.0 percent. Employment remains around its maximum sustainable level while inflation remains below the 2 percent target mid-point but within our target range. Economic developments since the August Statement do not warrant a change to the already stimulatory monetary setting at this time.
Economic growth continued to slow in mid-2019 reflecting weak business investment and soft household spending. We expect economic growth to remain subdued over the remainder of the calendar year. We will continue to monitor economic developments and remain prepared to act as required.
Trading-partner growth has also slowed. Growth in global trade and manufacturing is weak and uncertainty remains high, dampening global

Release date
05 November 2019

Building public confidence in the insurance sector requires more effort from all industry participants, Reserve Bank of New Zealand Governor Adrian Orr said in a speech to the Insurance Council of New Zealand today.
Through the Insurance (Prudential Supervision) Act, the Reserve Bank is tasked with maintaining industry soundness and public confidence in the insurance sector.
Mr Orr says “The insurance sector is part of the ecosystem that society relies heavily on to both mitigate risks and/or transfer the risk-burden to those best able to manage it.”
Insurers need to manage the evolving risks facing the sector. For example, climate change is leading to more frequent insurance events. Likewise, advances in science and technology

Release date
04 November 2019

Westpac New Zealand Limited (Westpac) has retained its accreditation as an internal models bank following completion of an extensive remediation process required by the Reserve Bank.
In 2017 the Reserve Bank required Westpac to undertake an independent review of its compliance with internal models obligations. The review found that Westpac was using a number of unapproved models and that it had materially failed to meet requirements around model governance, processes, and documentation.
The Reserve Bank imposed a precautionary capital overlay in light of the regulatory breaches, and gave Westpac 18 months to remedy the failures or risk losing its accreditation as an internal models bank.

Deputy Governor Geoff Bascand says that

“We commend the release of the Aotearoa Circle’s Sustainable Finance Forum interim report. We believe that climate change could lead to material economic and financial stability impacts and as a kaitiaki of the financial system, we at the Reserve Bank of New Zealand – Te Pūtea Matua have a strong interest in the effect that this will have on economic wellbeing of New Zealanders for generations to come,” says Reserve Bank Governor Adrian Orr.
“This is why we have linked up with our international counterparts via the Network for Greening the Financial System (NGFS) and the Sustainable Insurance Forum to strengthen the global response required to meet the goals of the Paris agreement. Through this network, we are working with more than 45 other central banks and supervisors from countries

Release date
30 October 2019

A Reserve Bank survey of the public’s cash use has found that nearly nine in every 10 New Zealanders prefer to pay for things without using cash, while just six percent had used only cash to pay for things in the week before completing the survey.
“The 2019 survey results released today reinforce the need for the cash system – the way cash is distributed and circulated – to evolve with the way New Zealanders are using cash,” says Assistant Governor and General Manager of Economics, Financial Markets and Banking Christian Hawkesby.
The survey was commissioned by the Bank’s Future of Cash – Te Moni Anamata programme which is in the final week of a public consultation on proposals for the Bank to take a more active role in the cash

Release date
29 October 2019

The Reserve Bank of New Zealand’s Assistant Governor and General Manager of Economics, Financial Markets and Banking, Christian Hawkesby, spoke at the 11th Annual Commonwealth Bank Global Markets Conference, in Sydney on Monday 28 October, 2019.
Providing clarity about central bank communications, the speech focused on the art of listening and understanding to interpret information from financial markets, and speaking clearly.
“There is a greater expectation from the public that information is easily available and understandable. This has resulted in a wider and deeper engagement with financial markets and society as a whole, with more speeches and publications increasingly used to provide perspectives,” Mr Hawkesby said.
The

Release date
16 October 2019

The International Association of Currency Affairs (IACA) has recognised the Reserve Bank of New Zealand by awarding its Armistice Day coin winner of the Best Commemorative Coin and Best Public Education categories.
Announced at the IACA biannual currency conference in Rome, the Excellence in Currency Awards promote and recognise excellence in the industry.
Governor Adrian Orr said “It’s a very proud day and reflects the project team’s hard work. We couldn’t have done it without the support of our many external stakeholders, including the Returned and Services Association, New Zealand Defence Force and the Blind Foundation. It is a win for all New Zealanders”.
The coin, released in 2018, marked 100 years since the signing of the

Release date
11 October 2019

Statement from the Reserve Bank of New Zealand’s Senior Leadership Team
Leading the people at the Reserve Bank of New Zealand is an absolute privilege, and we never take that for granted. We are surrounded by incredibly clever and dedicated people who are driven by the shared values we have at Te Pūtea Matua: inclusion, integrity, and innovation.
Every day we come to work with the same ambition and drive – to serve all New Zealanders so they can live their lives with prosperity and the reassurance that the financial system we regulate remains stable and productive. To do that we need to have the brightest and best people who come from all sorts of backgrounds with a wealth of experience, wisdom and knowledge.
We are immensely

Release date
02 October 2019

Cash system participants and the wider public are being asked for their views about the Reserve Bank of New Zealand taking a more active role in the cash system.
A consultation paper has been released today as part of the Bank’s ongoing Future of Cash – Te Moni Anamata programme which is considering the implications for New Zealanders of falling cash use for every-day transactions, including the impacts on the system that supplies, moves and stores it.
Assistant Governor Christian Hawkesby says the Reserve Bank is just one cog in a cash system machine which includes the banking system, armoured truck companies, retailers, and independent ATM providers. “We see roles for all parts of the system – along with interest groups, whānau

Release date
01 October 2019

The Reserve Bank has today released three independent international experts’ assessments of its Capital Review.
The proposals aim to protect the public from the personal, social, and economic impacts of a potential bank failure. The independent experts were commissioned to consider the analysis and advice underpinning the proposals.
“Each independent reviewer signalled their support with the direction proposed in the Capital Review,” says Geoff Bascand, Deputy Governor of the Reserve Bank.
“They all acknowledged the quality of analysis underpinning our proposals, the transparency of our process, and the care we have taken to consider the points raised by submitters during the consultation process to date.”
The experts were asked to

Release date
30 September 2019

The New Zealand economy has proved resilient through a period of weakening global growth and heightened global uncertainty according to the Reserve Bank’s Annual Report 2018-19 released today.
“Our economic and policy environment is constantly changing, and we’re evolving with it to ensure we’re ready to meet the needs of New Zealanders now and in the future,” Governor Adrian Orr says.
“Throughout the year our priorities focused on setting the foundations for significant change and setting us up for growth and innovation.
“One of our highlights has been the new framework for the way we run our monetary policy functions that took effect on 1 April 2019. Working alongside the Treasury, we designed, implemented and embedded the new

Release date
27 September 2019

The Reserve Bank of New Zealand’s Governor, Adrian Orr, spoke at the Federation of Māori Authorities Me Uru Kahikatea (FOMA) annual conference in Nelson today, which is in its 32nd consecutive year.
Governor Adrian Orr praised Māori businesses for their sustainable and innovative approach to business: "the economic practices of your tīpuna are well known to have been, and continue to be, long-term and inter-generational. Your investments aim to be values-based in the interests of your mokopuna and their mokopuna.”
This year’s annual conference theme ‘Bringing us together through Nga Taonga Tuku Iho’ is intended to challenge FOMA members about their thinking and generate conversations around protecting their cultural capital for

Release date
27 September 2019

The Reserve Bank has affirmed its Climate Change Strategy through the investment of US$100 million of green bonds.
The investment was made via the Bank for International Settlements’ USD Green Bond Investment Pool (BISIP G1), which was launched in response to growing demand for climate-friendly investments among central banks, says Reserve Bank Governor Adrian Orr.
“The green bond investment pool was developed with the objective of promoting investments in green finance, aligning well with the Reserve Bank’s own Climate Change Strategy that we launched last year.
“As a long-term focussed Reserve Bank, we are committed to acting as a leader in the finance sector in fostering responsible, sustainable investment with long-term

Release date
26 September 2019

New Zealand is in a sound position to both seize the opportunities and manage the challenges associated with the global low interest rate environment, the Reserve Bank Governor said in a speech today.

Governor Adrian Orr told the NZX Issuer Forum in Auckland that the global low interest rate environment is providing opportunities and challenges for central banks around the world, and New Zealand is not alone.

Mr Orr said low global interest rates primarily reflect low and stable inflation rates, which is a “deliberate and desired” outcome of monetary policy. However, many central banks are facing the challenge of inflation consistently running below target, prompting them to reduce policy rates to stimulate spending and boost

Release date
23 September 2019

The Reserve Bank will be reporting material breaches from banks on its website from next year, in an effort to improve transparency and market discipline.
The decision follows a public consultation on the matter late last year, and ongoing discussion with stakeholders on a new framework for the reporting of banks’ breaches. The Reserve Bank today published a summary of submissions and final policy decisions on the reporting and publication of breaches by banks.
The new policy will require a bank to report promptly to the Reserve Bank when there is a breach or possible breach of a requirement in a material manner, and report all minor breaches every six months. Only actual material breaches will then be published on the Reserve

Release date
17 September 2019

The Reserve Bank of New Zealand (RBNZ) and Financial Markets Authority (FMA) today released their findings on life insurers’ responses to the joint Conduct and Culture Review.
Overall, the regulators were disappointed by the responses. Significant work is still needed to address the issues of weak governance and ineffective management of conduct risk, identified in the regulators’ report earlier this year.
Rob Everett, FMA Chief Executive, said: “While we’re disappointed, we’re not surprised as the responses confirm what we found in our original review. It’s clear that progress has been slow and not as far-reaching as required.
Some providers have started work to identify the customer and conduct issues they face, others have not

Release date
17 September 2019

The New Zealand dollar (NZD) remains the tenth most traded currency globally, according to a global survey compiled by the Bank for International Settlements (BIS) released today.
The triennial survey took place in April and involved central banks and other authorities in 53 jurisdictions and close to 1300 banks and other dealers.
The NZD has held the number 10 spot since 2010. The US dollar retained the number one spot – being on one side of 88% of all foreign exchange (FX) trades – followed by the euro and the Japanese yen respectively.
Reserve Bank Assistant Governor and General Manager of Economics, Financial Markets and Banking Christian Hawkesby says New Zealand has had a high FX turnover to GDP ratio throughout history