Decisions on DTIs and LVRs to be in the hands of new RBNZ committee

The financial policy committee (FPC) will be given authority to make key policy decisions relating to financial stability, including setting the prudential requirements for financial institutions regulated by the RBNZ.

It will also set capital and liquidity requirements for banks and other deposit takers.

There was major criticism during the banking inquiry by the four big Australian-owned banks and smaller banks about the level of capital banks should be required to hold. The RBNZ has already moved to look at this issue and is expected to decide by the end of the year.

The new committee will consist of the RBNZ board chair, the governor, three other board members, and up to two external members recognised as experts in fields relevant to the FPC’s work.