Macro-prudential policy - implementation

Macro-prudential instruments are operationalised via changes to the Banking Supervision Handbook and banks’ conditions of registration, in accordance with the macro-prudential policy framework for New Zealand.

LVR restrictions were implemented in October 2013, and updated in November 2015 and October 2016.

Read more about LVR restrictions.

The Reserve Bank has suggested that serviceability restrictions such as DTI limits would be a useful addition to the tools allowed under the Memorandum of Understanding. If they were added and the Reserve Bank elected to enact them in the future, DTI limits would limit the share of residential mortgage borrowers able to obtain large loans relative to their income. In June 2017, the Reserve Bank consulted the public about this.

View the consultation on serviceability restrictions as a potential macroprudential tool in New Zealand.

The Reserve Bank will consult on any changes required to enable the operation of the remaining macro-prudential instruments – sectoral capital requirements and adjustments to the minimum core funding ratio – should the Bank decide they are necessary.

Consultation history

Between March and May 2013, the Reserve Bank consulted on the macro-prudential policy framework:

A new macro-prudential policy framework for New Zealand – final policy position (PDF 305KB) May 2013.
This reflected feedback received during the consultation on Macro-prudential policy instruments and framework for New Zealand.

Response to submissions received for the consultation on macro-prudential policy instruments and framework for New Zealand (PDF 207KB) May 2013.
The response to submissions summarised the submissions received, and set out the Reserve Bank’s response and policy implications.

Consultation paper on Macro-prudential policy instruments and framework for New Zealand (PDF 227KB) March 2013.
The consultation paper described and sought feedback on the proposed package of macro-prudential instruments. In addition to outlining the proposed instruments, the paper outlined the objectives of macro-prudential policy and the proposed decision-making, governance and accountability framework for the conduct of macro-prudential policy.

Background paper− Unpacking the toolkit: the transmission channels of macro-prudential policy in New Zealand (PDF 893KB) March 2013.
The consultation paper was accompanied by this background paper, which sets out the likely impact of the proposed instruments on the twin objectives of building financial system resilience, and reducing extremes in the financial cycle.