Relationship with other regulatory and supervisory bodies
The Reserve Bank maintains relationships with other banking and financial system regulators and supervisors, both in New Zealand and overseas, reflecting shared interests and the benefits of cooperation for promoting effective and efficient financial sector regulation and supervision. Other New Zealand government agencies and departments also provide input into the Reserve Bank's Financial Stability Report.
Council of Financial Regulators
Domestically, the Reserve Bank is a member of the Council of Financial Regulators. The purpose of the Council is to share information, identify important trends and issues and ensure appropriate coordination arrangements are in place to respond to financial market events and developments. The members of the Council are the Financial Markets Authority, the Reserve Bank, the Commerce Commisson, the Treasury and the Ministry of Business, Innovation and Employment.
The Reserve Bank is a member of the Banking Forum that coordinates the work of several Government agencies that regulate banks. The Banking Forum is a sub-committee of the Council of Financial Regulators. The permanent members of the Council of Financial Regulators are the permanent members of the Banking Forum. The Ministry of Justice and the Inland Revenue Department are associate members.
The following documents provide some background to the Council of Financial Regulators:
- Terms of Reference of the Council of Financial Regulators.
- Terms of Reference for the banking forum.
- Memorandum of Understanding (PDF 1.2MB) between Financial Markets Authority and Reserve Bank of New Zealand.
For links to the websites of other members of the Council of Financial Regulators, see Council of Financial Regulators - Terms of Reference.
Trans-Tasman Council on Banking Supervision
The Trans-Tasman Council on Banking Supervision (TTBC) consists of the Reserve Banks and Treasuries of Australia and New Zealand, and the Australian Prudential Regulation Authority (APRA). In 2013, the New Zealand Financial Markets Authority (FMA) and the Australian Securities and Investment Commission (ASIC) were added as members.
Terms of reference
The TTBC’s terms of reference set out its role and responsibilities. Its main role is to monitor and coordinate trans-Tasman home-host regulatory issues, including crisis management preparedness. A key goal is to promote the co-ordination and harmonisation of trans-Tasman bank regulation where appropriate. However, the TTBC’s mandate also covers potential issues relating to financial stability, efficiency, and integration throughout the wider financial sector.
New Zealand’s Minister of Finance and the Australian Treasurer agreed to establish the TTBC in 2005. This followed a July 2004 report from a working party of the Australian and New Zealand Treasuries, the Reserve Banks of Australia and New Zealand and APRA. The working group was formed to develop policy options for closer integration of trans-Tasman banking regulation. The working party submitted a joint report to their respective Ministers entitled Development of a framework for closer integration of trans-Tasman banking regulation. This was followed by the submission of a Cabinet paper from the Minister of Finance entitled Proposals for closer integration of trans-Tasman banking regulation and supervision. Four papers on trans-Tasman banking regulation were released in January 2005 as part of an Official Information Act request.
The Reserve Bank of New Zealand Act was amended in 2006 to include changes recommended by the Trans-Tasman Council on Banking Supervision that require APRA and the Reserve Bank of New Zealand to support each other in meeting their statutory responsibilities relating to prudential supervision. Equivalent legislation was passed in Australia around the same time. Trans-Tasman co-operation discusses these legislative changes.
Memorandum of Cooperation
In September 2010, the TTBC members signed a Memorandum of Cooperation on Trans-Tasman Bank Distress Management (PDF 530KB). The Memorandum sets out high level principles to which Council members will have regard when faced with financial distress involving banks with significant operations in Australia and New Zealand, and supports the Council’s role in promoting and reviewing crisis preparedness for trans-Tasman banks.
The Memorandum is a non-binding understanding on how cooperation will be promoted in all stages of crisis resolution, including problem identification; information sharing; systemic impact analysis; assessment of response options; implementation of measures to resolve a crisis; and public communications.
Notwithstanding this Memorandum, the Council members recognise that the exact nature of any response by the respective governments will always depend on the specifics of a particular situation. Accordingly, the Memorandum is not a commitment from the Australian or New Zealand governments towards any specific course of action.
The Memorandum is not governed by international law and does not create legal relations between signatories.
Reports of meetings
To support transparency, the TTBC has agreed to publish a statement after each of its regular meetings. The first of these statements covers the meeting held on 8 November 2019.
Australian Prudential Regulation Authority
In order to facilitate the supervision of banks and insurers with operations in both Australia and New Zealand, the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of New Zealand have entered into a memorandum of understanding regarding the sharing of supervisory information. This was last updated in May 2012.
- Memorandum of Understanding with the Australian Prudential Regulation Authority, May 2012. Also available as a PDF file (2.8KB).
- Memorandum of Understanding with the Australian Prudential Regulation Authority, July 2003.
Bank of England
The Reserve Bank of New Zealand and the Bank of England (formerly the Prudential Regulation Authority and the Financial Services Authority) have entered into a memorandum of understanding that establishes an arrangement for sharing supervisory information, so as to assist with the supervision of banking and insurance originations that operate both in New Zealand and the UK. This was last updated in July 2012.
Memorandum of Understanding with the United Kingdom's Financial Services Authority. Also available as a PDF file (17KB).
Financial Services Commission and The Financial Supervisory Service – Republic of Korea
The Reserve Bank of New Zealand has entered into a memorandum of understanding with the Financial Services Commission and the Financial Supervisory Service from the Republic of Korea. The memorandum of understanding establishes mutual cooperation in the area of financial supervision.
Memorandum of Understanding with the Financial Services Commission and the Financial Supervisory Service from the Republic of Korea (PDF 3MB).
China Banking Regulatory Commission
The Reserve Bank of New Zealand and the China Banking Regulatory Commission have entered into a memorandum of understanding which establishes mutual cooperation in the area of banking supervision.Memorandum of Understanding with the China Banking Regulatory Commission (PDF 4MB).
Reserve Bank of India
The Reserve Bank of New Zealand and the Reserve Bank of India have entered into a memorandum of understanding which establishes mutual cooperation in the area of banking supervision.
The Reserve Bank of New Zealand is a member of EMEAP, the Executives' Meeting of East Asia-Pacific Central Banks, a cooperative organisation of central banks and monetary authorities in the East Asia and Pacific region. EMEAP's primary objective is to strengthen the cooperative relationship among its members. EMEAP Governors meet annually and Deputy Governors meet twice a year. In addition, there are a number of specialist EMEAP working groups that the Reserve Bank participates in, including the Working Group on Banking Supervision. (See the EMEAP website for more information.)
The Reserve Bank of New Zealand is a member of the SEANZA Forum of Banking Supervisors. This is an offshoot of the main SEANZA Group: South East Asia and New Zealand and Australia. The SEANZA Forum of Banking Supervisors provides a means for banking supervisors from the region to establish contact with each other, in order to exchange information on issues and problems of common interest.
Basel Committee on Banking Supervision
The Basel Committee on Banking Supervision is an international group of banking supervisors that endeavours to formulate broad supervisory standards and guidelines, and recommend statements of best practice. The Committee encourages convergence towards common approaches and common standards - for example, through the Basel Core Principles for Effective Banking Supervision - without attempting detailed harmonisation of member countries' supervisory techniques. The Committee's website is a useful source of information on international best practice in relation to banking supervision and the management and control of banking risks.
Although the Reserve Bank of New Zealand is not a member of the Basel Committee on Banking Supervision, it does participate in the Basel Consultative Group and provides submissions on proposals of the Basel Committee on Banking Supervision. This includes the Reserve Bank's public submission on the Basel Committee's consultative proposals to strengthen the resilience of the banking sector (April 2010) (PDF 80KB).