Reserve Bank welcomes decision on regulation

Reserve Bank welcomes decision on prudential regulation

The Reserve Bank welcomes the Cabinet decision for the Reserve Bank to be the single prudential regulator for New Zealand, as part of the Review of Financial Products and Providers. This will widen the scope of the Reserve Bank's prudential functions to include the prudential regulation of non-bank deposit-takers (NBDTs) and insurers.

For NBDTs, trustee corporations will continue to be the front-line supervisors. The Bank's role will be limited to licensing NBDTs, developing and enforcing minimum prudential and governance requirements and applying credit rating requirements. The Bank will also assist in the revision and simplification of public disclosure requirements for NBDTs.

The proposed overall objective for prudential regulation of the NBDT sector is to promote a sound and efficient financial system.

The proposals are expected to provide a more consistent approach to the supervision of NBDTs and provide a stronger basis for confidence in the NBDT sector. Improved disclosure and credit ratings will assist depositors to make better-informed investment decisions. For more detailed information on key features of the new arrangements please see "Questions and Answers on Proposals for the Regulations of Non-Bank Deposit Takers " on the Reserve Bank's website.

Policy decisions on the regulation and supervision of insurance will be made in the next phase of the Review, expected by November 2007.

ENDS

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