Reserve Bank Bulletin looks at the importance of market discipline in its prudential regime

Release date
04 February 2016

The Reserve Bank today published a Bulletin article, ‘The importance of market discipline in the Reserve Bank’s prudential regime(PDF 530KB)‘  that argues market discipline is a central and robust component of the Bank’s prudential framework.

The Bank’s prudential framework is based on a three-pillar approach that relies on self-discipline from regulated entities, market discipline provided by market participants, and regulatory discipline. Since the global financial crisis, the regulatory pillar has been bolstered in line with international regulatory developments. The article argues that the added emphasis on the regulatory pillar has not diminished the importance of market discipline, and the Bank encourages market discipline by supporting three essential conditions which are discussed.

More information: Reserve Bank Bulletin

Media Contact:
Carole van Grondelle, External Communications Adviser,
Ph 04 471 3807 or 0272 555 400, carole.vangrondelle@rbnz.govt.nz