Review of the Reserve bank Act - Phase 2

This submission covers only the main points of relevance to the broader business community. Our primary concern is with initiatives that will increase the cost of capital to businesses, and maintaining the integrity of New Zealand’s financial system.

In-principle decisions and follow-up questions on: The role of the Reserve Bank and how it should be governed.

We agree with the Minister of Finance’s in-principle decision to keep responsibility for prudential regulation with the Reserve Bank. New Zealand’s system does not have the size nor complexity requiring the splitting of prudential regulation from monetary policy setting.

We support the Minister’s in-principle decision to give the Reserve Bank a single high-level objective to ‘Protect and enhance the stability of New Zealand’s financial system’. A sole objective is the simplest way of ensuring the Bank focuses on those factors it can control within its field of expertise. Climate change should not be addressed through additional Bank objectives – not because climate change is not important, but because it is primarily addressed through specific legislation.

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