Officials to continue work on greater integration of Trans-Tasman banking regulation frameworks

Earlier this year, a working party of officials from the New Zealand and Australian Treasuries, the Reserve Banks of New Zealand and Australia and the Australian Prudential Regulatory Authority (APRA) undertook a series of discussions to investigate possible options to further integrate the New Zealand and Australian banking regulation regimes.

One outcome of this process is that the Reserve Bank of New Zealand is working on a model of integration that builds on current regulatory frameworks and institutions.

Under this model the Reserve Bank will seek to harmonise regulatory rules where appropriate and to strengthen arrangements for information sharing and coordination with the Australian authorities to improve the capability of the Reserve Banks to manage a crisis or failure situation.

Further information about this work is available on the Reserve Bank website.

The working party's initial investigation also usefully highlighted areas for further work before other changes to the current regulatory and institutional framework for banking could be considered.

To this end, a second working group of New Zealand officials from the Treasury, Reserve Bank of New Zealand and the Ministry of Economic Development has been set up to review the regulation of New Zealand's major financial institutions, particularly banking institutions, and the contribution it makes to growth and economic development. A key question for the group is whether the provision of financial services in New Zealand would be enhanced through a joint trans-Tasman approach to banking regulation and crisis management, while still protecting the interests of both Australia and New Zealand.

The group will also look at links with the wider financial sector. In addressing this question the main focus of the group will be on the banking system, however the merits of including insurance under a similar regulatory approach will be addressed. This consideration of insurance will not repeat the work of the Law Commission on life insurance but will provide a framework for considering any recommendations made by the Law Commission. It will focus on whether the provision of insurance services could be enhanced through a joint Trans-Tasman approach.

The New Zealand working group will provide a progress report to the Minister of Finance prior to his next meeting with the Australian Treasurer on single economic market issues. It is scheduled for February 2005.

For a copy of the terms of reference, click here.