The Reserve Bank will shape and thin the stock of banking regulation but don't expect "a severe pruning", according to deputy governor Grant Spencer.
Speaking to the Bankers' Association in Auckland yesterday, Spencer said it was "sound practice" to review the regulatory regime from time to time, especially after a time of rapid change.
The Reserve Bank launched a stocktake of regulations for banks and non-bank deposit takers earlier in the year. The review is expected to take about a year.
There had been considerable financial sector regulation in recent years in response to the global financial crisis five years ago, Spencer said.
The regime was stronger than before the global financial crisis and the Reserve Bank was broadly happy with it. "But it is also more complex and has expanded at a rapid pace," Spencer said.
The banking sector in New Zealand came through the crisis "in very good shape by international standards", he said, which was a testament to the industry and the regulatory environment, but that framework needed to be continuously improved.
The central bank wanted a world-class regulatory framework that was lean, easy to use and as cost-effective as possible, while still supporting the soundness and efficiency of the financial system. Regulations had to be fit-for-purpose and "the benefits outweigh the constraints and costs".
The aim of the review was not to fundamentally change or roll back the regulatory framework. The bank aimed to shape and thin the stock of regulation, not start a "major reformulation of the system", he said.
The review would not look at changes to the Reserve Bank Act itself, nor the Non-Bank Deposit Takers Act, so it would not be looking at the supervisory approach it had adopted.