Source: Auckland University of Technology (AUT)
03 Sep, 2020
The Law School’s Helen Dervan has won a prestigious Trans-Tasman award for her joint research into financial regulation.
Helen and her co-author, lawyer Simon Jensen (Buddle Findlay), have been awarded the Australasian Banking and Financial Services Law Association (BFSLA) Research Essay Prize 2020.
Their essay argues that the government’s decision to use a governance board for all Reserve Bank decision-making will not provide the best structure for prudential regulatory decision-making.
Rather, the authors posit, a specialist statutory committee should be established for prudential regulation, as it has been for monetary policy. This approach would better align New Zealand with its closest peers in prudential regulation – Australia and the UK, which also use the Twin Peaks model of financial regulation and have specialist decision-making bodies in this area.
Helen says she and Simon are delighted to be recognised for their research.
“The Reserve Bank is arguably the most powerful economic institution in New Zealand. But many Kiwis may not realise that for decades, the Reserve Bank has, by international standards, pursued an unconventional approach to bank supervision. NZ retail depositors are less protected than in virtually all other OECD countries and there are higher expectations on NZ retail depositors to monitor the soundness of their banks. That’s a philosophy that the current New Zealand government is attempting to address.”
The authors argue that the government’s decision to establish a governance board may not sufficiently support the reasonably substantial changes proposed to NZ’s prudential regulatory regime and counter cognitive biases. Their essay encourages the government to reconsider its decision because a change in the Reserve Bank’s decision-making model will likely have to carry the country through future financial crises.
“It is fitting that Helen and Simon are acknowledged for their bold approach to strengthening New Zealand’s prudential regulation,” says AUT Dean of Law, Professor Charles Rickett. “Backed by strong evidence, their essay sets out a viable pathway for improving New Zealand’s banking and regulatory systems.”
The Banking and Financial Services Law Association is a Trans-Tasman organisation which aims is to provide thought leadership on issues relevant to its members through connecting with some of the world’s leading practitioners, academics, regulators and members of the judiciary.
Last year, Helen and Simon won the Rex Mason Prize 2018 for their research on deposit insurance.