IMF to assess New Zealand

Reserve Bank oversight of the New Zealand insurance and banking sectors, and Financial Markets Authority regulation of the markets, are to be assessed by the International Monetary Fund.

Wednesday, April 27th 2016, 2:39PM

The Reserve Bank said the IMF's Financial Sector Assessment programme would start later this year.

"New Zealand’s financial sector plays a very important role in supporting economic performance and the improvement in living standards for all New Zealanders. It is crucial that the various functions of the financial system – such as the allocation of funds from savers to borrowers, facilitating an efficient means of transacting, and mitigating economic risk – are equally supported by a robust regulatory framework that is appropriate for New Zealand conditions."

The IMF will examine how New Zealand’s financial institutions are prudentially regulated and supervised by the Reserve Bank, and how New Zealand’s capital markets and financial market conduct are regulated by the Financial Markets Authority (FMA).

A team from the IMF will visit New Zealand twice, in August and November, to meet and question New Zealand authorities and hold discussions with industry groups and financial sector entities that are subject to regulation.

Recommendations and findings from the FSAP will be published by the IMF in early 2017.

The IMF last conducted an FSAP review on New Zealand in 2004.

New Zealand authorities will consider and respond to the results of the FSAP to help ensure that the current regulatory framework is making the best possible contribution to New Zealand’s economic welfare.

The review is voluntary and had been put off because of the establishment of the FMA and the introduction of Basel III rules.

New Zealand banking and insurance will be compared against international norms for a graded assessment.

Securities law and financial market infrastructure will face limited reviews that are not graded.

Tags: FMA Reserve Bank