Second, there is the issue of commercial sensitivity. Most of the time and in most places, the financial system does prove an efficient way for savings to be channelled to productive investment. As many of you will know, our regulatory and supervisory framework is based on the three pillars of self, regulatory and market discipline.What do we mean by market discipline in this context? The Reserve Bank now collects more private data, although still significantly less than is required under comparable regimes internationally. �V��)g�B�0�i�W��8#�8wթ��8_�٥ʨQ����Q�j@�&�A)/��g�>'K�� �t�;\�� ӥ$պF�ZUn����(4T�%)뫔�0C&�����Z��i���8��bx��E���B�;�����P���ӓ̹�A�om?�W= For them, we intend to remove the off-quarter disclosure requirements. Research by the World Bank finds that deposit insurance lowers banks’ interest expenses and makes interest payments less sensitive (though not insensitive) to bank risk and liquidity. Our new capital and liquidity requirements for banks have been tailored to New Zealand circumstances. They either: In this context, the three pillars work together and often support one another. For most industries and in most circumstances within the financial services industry, market discipline will deliver, and historically has delivered, good outcomes. H���yTSw�oɞ����c [���5la�QIBH�ADED���2�mtFOE�.�c��}���0��8�׎�8G�Ng�����9�w���߽��� �'����0 �֠�J��b� We reviewed and refreshed our disclosure requirements in 2011, and looked at them again in the context of the Stocktake with the aim of reducing unnecessary costs and enhancing the market discipline pillar of our framework. As many of you know, the FSAP is a comprehensive assessment of a country’s financial sector by the IMF. Pillar 3 Market discipline Minimum capital requirements for Credit Risk, Operational Risk, Market Risk and Interest Rate Risk in the Banking Book Firm-wide risk oversight, Internal Capital Adequacy Assessment Process (ICAAP), consideration of additional risks, capital buffers and targets and risk concentrations, etc. By making the data more relevant, timely and easier to access, and by raising awareness about the existence and importance of the data, the dashboard could expand the base of users who are exerting market discipline on banks. That expectation was reinforced by the widespread Government guarantees (including in New Zealand) during the GFC. This Market Discipline disclosure under Basel III is made following bank’s disclosure policy, approved by the oard of Directors and ‘Guidelines on Risk ased apital Adequacy (Revised Regulatory apital Framework for Banks in line with Basel III)’ for banks issued by angladesh ank in December 2014 . H�dO=O�@��+��qm�.׌mU! Measures to encourage greater financial education and awareness will also assist. Consequently, depositors and investors should be making decisions based on more up to date (and hence relevant) information. First, the potential trade-off between timeliness and data quality. Secondly, we will be refining the suitability assessment process for the directors and senior managers of banks by adopting a more focused definition of senior manager and new rules relating to the ongoing suitability of directors and senior managers. The conclusions of the stocktake were published late last year. I am sure that you are as well. We looked for measures that would result in tangible cost reductions and improve overall efficiency within our three pillar approach to prudential regulation. Good disclosure is critical for market discipline and New Zealand was an early pioneer in this field. I will focus most of my remarks today on market discipline. Finally, there must be the right mechanisms available for market participants to exercise market discipline. 0 �p� Our new macro-prudential policy framework will also be reviewed. This means that disclosed information must be both relevant and timely. How the Dashboard interrelates with the full and half year disclosure statements that banks will still be preparing; and. For example, we will: Some submitters suggested that we publish all written submissions on our public consultations. As some of you may have read, several submitters argued that we should publish all of the information we receive through private reporting, potentially publishing a monthly dashboard of this information. Part of Springer Nature. We think there should be more efficient ways to design these disclosure requirements. The dashboard fits in well with our efforts to look ahead to improve the use of technology in our regime, and to best meet the needs of the market. In summary, market discipline refers to the way in which market participants influence a financial institution’s behaviour through monitoring its risk profile and financial position. This service is more advanced with JavaScript available, From Basel 1 to Basel 3: The Integration of State-of-the-Art Risk Modeling in Banking Regulation The regulatory requirements fall into three main categories. These keywords were added by machine and not by the authors. H�\��n�@ཟb��"��ܹK�Db����=PK�X�,x���Z$±�!��>��vʹ\��s=$iܼ�_�p���KRU&�o^��n��������؆��O���f�l��m��s�'���ʴ���K=|�����]�w��%�y��y�)�뜘�҆�P7a��SH�,�V����U������m�c��*���Y���*^o�k��9[���eȎ�!+��3{�W�W䒹D~c~C�%~ļ}�.�;2�#�, �3��s�l�-�02�fK����la�4[�-�f�f^#�i�z�G�z�G�z�G�z�G�z�G�za��>�} This process is experimental and the keywords may be updated as the learning algorithm improves. For example, all of our significant policy proposals are accompanied by a RIS, and we have a high degree of interaction with stakeholders, both through formal consultations and informal discussions. "F$H:R��!z��F�Qd?r9�\A&�G���rQ��h������E��]�a�4z�Bg�����E#H �*B=��0H�I��p�p�0MxJ$�D1��D, V���ĭ����KĻ�Y�dE�"E��I2���E�B�G��t�4MzN�����r!YK� ���?%_&�#���(��0J:EAi��Q�(�()ӔWT6U@���P+���!�~��m���D�e�Դ�!��h�Ӧh/��']B/����ҏӿ�?a0n�hF!��X���8����܌k�c&5S�����6�l��Ia�2c�K�M�A�!�E�#��ƒ�d�V��(�k��e���l ����}�}�C�q�9 For example, improved governance within an organisation can result in better disclosure, and vice versa. Our overall framework is coherent without being purist. Thank you for the opportunity to meet with you this evening. The last FSAP of New Zealand was in 2004 before the GFC. 2y�.-;!���K�Z� ���^�i�"L��0���-�� @8(��r�;q��7�L��y��&�Q��q�4�j���|�9�� The primary objective of the stocktake was to ensure the efficiency, clarity and consistency of prudential requirements applying to banks and NBDTs. The process for providing information in the dashboard will involve electronic delivery of data that banks are already producing. Market Discipline: Disclosures on Risk Based Capital (Basel-III) 1. We are largely compliant with Treasury best practice guidance in this area. The dashboard would be an electronic form of reporting that is more accessible, comparable, and timely, and which should also reduce costs for banks. Over 10 million scientific documents at your fingertips. �o�>9Q�-�X��o,e����m{��{�wqp�S���zy������fE�S=L��>�l��n�!������n�#ݼ��=,��!>f�o}�S��~�w�n�{�?����n�pM�/��������EH�˼�E��)�y�#W�e���K�y5�Y�s֜�Aތ�_�_>�_�q�e~NY0c�d�3Ka��TfE��٘�=s@��xF��+�%��u�K�Sk�ͽ��5�K���K6�~�_��~�_��~�_��~�_��~�_��~�_��~�_��~�_�W�~�_�W�~�_�W�~�_�W�~�_�W�~�_�W�~�_�W�~�_�W�~�_���{�=�~O��������{�=�~O��������{�=�~O���h0���h0���h0�����^ ��`0 ��`��gh8C��Цwgh�{�3������� �?������� �?������� �?�_�=�S�̘S 3j���T~����M���g���Y5�6�W�q�W���� ��_x&����衩ջ�]��}�����ؔюOm����.�K���� [2] These revisions are based on five key requirements for disclosures including that they be clear, comprehensive, meaningful to users, consistent over time and comparable across banks. endstream endobj 711 0 obj <> stream �x������- �����[��� 0����}��y)7ta�����>j���T�7���@���tܛ�`q�2��ʀ��&���6�Z�L�Ą?�_��yxg)˔z���çL�U���*�u�Sk�Se�O4?׸�c����.� � �� R� ߁��-��2�5������ ��S�>ӣV����d�`r��n~��Y�&�+`��;�A4�� ���A9� =�-�t��l�`;��~p���� �Gp| ��[`L��`� "A�YA�+��Cb(��R�,� *�T�2B-� I would like to conclude with a few words about the forthcoming Financial Sector Assessment Programme (FSAP), which will start in the middle of the year and should be completed in early 2017 when the findings and recommendations will be made public. For example, requiring banks to only disclose non-standard conditions of registration in their disclosure statements (with standard conditions being made more easily available on our website), potentially consolidating covered bond disclosures under a single heading, and in the long term, reviewing the disclosure of credit risk mitigants.

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