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Public Standards and Private Monitoring: New Zealand's New Banking Supervision Regime

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  • Grimes, Arthur

Abstract

The Reserve Bank of New Zealand (RBNZ), which is well-known for its independence and anti-inflation stance under the Reserve Bank of New Zealand Act 1989, has embarked on another policy innovation. In January 1996, it implemented a new approach to banking supervision. Defying international trends, the RBNZ reforms envisage returning ‘supervision’ largely to the private sector, although the RBNZ retains a role in specifying minimum standards for banks to meet. This article outlines and analyses these proposals, in the context both of the broader reform process in New Zealand since 1984 and of international and academic developments. It also considers whether certain aspects of the proposals could be altered so as to better meet the Reserve Bank’s objectives.

Suggested Citation

  • Grimes, Arthur, 1996. "Public Standards and Private Monitoring: New Zealand's New Banking Supervision Regime," MPRA Paper 69393, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69393
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    References listed on IDEAS

    as
    1. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
    2. Mathias Dewatripont & Jean Tirole, 1994. "The prudential regulation of banks," ULB Institutional Repository 2013/9539, ULB -- Universite Libre de Bruxelles.
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    Cited by:

    1. Arthur Grimes, 1998. "Liberalisation of financial markets in New Zealand," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 61, December.
    2. Arthur Grimes, 2014. "Four Lectures on Central Banking," Working Papers 14_02, Motu Economic and Public Policy Research.
    3. Grimes, Arthur, 2001. "Apec competition principles: application to financial services," Japan and the World Economy, Elsevier, vol. 13(2), pages 95-111, April.
    4. Warren P. Hogan & Ian G. Sharpe, 1997. "Prudential Regulation of the Financial System: A Functional Approach," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 4(1), pages 15-28.

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    More about this item

    Keywords

    Banking supervision; central banking;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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