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New Zealand central bank says liquidity policy review receives support

·1 min read
FILE PHOTO: FILE PHOTO: Pedestrians walk near the main entrance to the Reserve Bank of New Zealand located in central Wellington, New Zealand

(Reuters) - The Reserve Bank of New Zealand said on Tuesday that the first stage of the central bank's review on its liquidity policy had received broad support.

The purpose of the review, kick-started earlier this year, is to improve the stability of financial institutions by lowering the likelihood of liquidity issues and improve their ability to manage such problems.

In February, the RBNZ launched its first consultation paper and intends to issue another at least three more on its liquidity policy.

"They (respondents) agreed that given the developments in international practice since our liquidity policy was introduced in 2010, and our recent Liquidity Thematic Review, now was a good time to review the policy," RBNZ Deputy Governor Christian Hawkesby said.

The central bank said respondents, including stakeholders from the sector, urged the RBNZ to consider the broader prudential landscape while amending the policy, and factor in effects of the incoming Deposit Takers Act, which is expected to be introduced https://www.rbnz.govt.nz/about-us/responsibility-and-accountability/our-legislation/proposed-deposit-takers-act#:~:text=The%20proposed%20Deposit%20Takers%20Act,scheme%20that%20we%20will%20oversee in parliament in July or August.

(Reporting by Harshita Swaminathan; Editing by Maju Samuel)