Source: MIL-OSI Submissions
The Council of Financial Regulators (COFR) has met to discuss what can be done to allow financial institutions to focus on their businesses and customers at such a disruptive time.
Reserve Bank Deputy Governor Geoff Bascand said the Reserve Bank and other agencies are working closely to help ensure that New Zealand’s financial markets operate smoothly and effectively, and that credit is available to households and businesses.
“In such uncertain times, it is important that firms have as much capacity as possible to deal with critical problems as they arise. So it makes sense for regulators to free up financial institutions to focus on matters such as helping customers through financial or other stress, or increasing their degree of monitoring and managing their own most urgent risks.”
“Some regulatory initiatives require regular industry-wide workshops and these are not feasible at the moment.”
As announced on Monday, the Reserve Bank has deferred the start date of the increased capital requirements for banks by 12 months, which it expects will enable banks to provide an additional $47 billion of credit. The Reserve Bank was planning to publish exposure drafts of the revised policy documents to make those changes on 1 April 2020, and is also postponing that publication for the time being.
In addition to this, the Reserve Bank will defer external-facing work on the following regulatory initiatives, for an initial period of six months:
Review of the bank liquidity thematic review (and subsequent review of the liquidity policy (BS13);
Review of the Insurance (Prudential Supervision) Act 2010;
Standard terms for Residential Mortgage Obligations;
Cyber resilience guidelines for all regulated entities;
Revisions to banks’ disclosure of regulatory breaches;
Review of the stress-testing framework and planned bank stress-tests;
Revising the process for approving banks’ internal capital adequacy models for credit risk; and
Future of cash – standards for banknote-processing machines.
Alongside these deferrals, the Reserve Bank will also be extending the transition period for its revised outsourcing policy by 12 months. Affected banks will now need to be fully compliant with the new requirements by 1 October 2023.
Mr Bascand said the Reserve Bank will continue work on any of the policy initiatives which are at a stage where progress can be made without industry input. These are still important pieces of work, and we will be continuing with them at an appropriate stage.”
COFR continues to meet regularly to discuss the impact of COVID-19 and ways to support the industry to tackle the challenges it presents. Any further changes or plans to restart deferred activities will be communicated in a timely manner.