Academic journal article The Reserve Bank of New Zealand Bulletin

RBNZ on Governance and Banking in NZ: 7 April 2003. (for the Record: Recent Press Releases)

Academic journal article The Reserve Bank of New Zealand Bulletin

RBNZ on Governance and Banking in NZ: 7 April 2003. (for the Record: Recent Press Releases)

Article excerpt

The Reserve Bank is seeking to evolve the way it supervises banks, Reserve Bank Governor Alan Bollard said today.

Speaking in Christchurch to the Institute of Directors, Dr Bollard outlined the internationally distinctive way in which the Reserve Bank supervises banks in New Zealand and emphasised that the Reserve Bank remains committed to its overall approach, which places significant responsibility on bank directors to maintain sound and prudent practices.

However, Dr Bollard also indicated that the Reserve Bank is reviewing some parts of the system now in place.

"We believe the New Zealand approach is an effective way of promoting a sound financial system. We also believe it reduces the moral hazard risks associated with conventional banking supervision, and strengthens the effectiveness of market discipline on banks. The fact that the New Zealand banking system is currently one of the healthiest in the world--with high asset quality, sound risk management practices and good capitalisation--bears testimony to this. However, we are certainly not complacent, and we remain ever-watchful to detect incipient signs of financial distress, and we stand ready to intervene if necessary. …

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