30 October 2000

Banking law updates proposed

The Reserve Bank today began a consultation process with the banking sector on proposals for updating the rules under which the Reserve Bank supervises registered banks. Registered banks and other interested parties have today been sent a description of a series of proposed changes to the banking supervision sections (Parts IV and V) of the Reserve Bank of New Zealand Act 1989.

Reserve Bank Banking System Department Chief Manager Peter Ledingham said: "A significant number of amendments are being suggested, but they are mainly technical and do not change the overall framework of bank supervision in New Zealand. The Reserve Bank is satisfied with the current framework, which is working well. These changes merely fine-tune it."

Included among the changes would be:

amendments that deal with the restrictions on business names that include the word "bank" and its derivatives;
refinements to the rules covering the registration and supervision of banks by the Reserve Bank;
a new part that would allow the Reserve Bank to better monitor the inter-bank payment systems used in New Zealand;
improvements to the Reserve Bank's powers for dealing with banks that are in trouble.

Mr Ledingham said: "The proposed changes reflect some of the recent technological innovations and changes in banking practice and will help bring us into line with recognised international standards."

"The proposals are only the suggestions of the Reserve Bank at this stage, and have not yet been considered by the Government. We shall be suggesting that these changes be included in the Government's 2001 legislative programme."

The deadline for responses is 31 December. A copy of the proposals is available on the Reserve Bank's web site at www.rbnz.govt.nz.

For further information contact
Paul Jackman
Corporate Affairs Manager
Ph 04 471 3671, 021 497 418, home 04 938 8177, Jackmanp@rbnz.govt.nz