Independent advice provided to the Government last year warned that the Reserve Bank’s plan to boost bank capital risked damaging the New Zealand economy.
A nine page memorandum was provided by consultant and former chief economist of Deutsche Bank NZ, Ulf Schoefisch, and concluded the regulator’s proposal to strengthen the country’s commercial banks “appears unnecessarily risky” and “appears to have been informed by low quality information”.
The advice was provided in mid-March, 2019 to David Parker, then economic Development minister and Carolyn Tremain, chief executive of the Ministry of Business, Innovation and Employment.
So this wasn’t advice commissioned by the banks, but by MBIE. And the advice was that the Reserve Bank’s proposals were risky and based on low quality information.
One of the few benefits of Covid-19 is the proposals have been dropped for now. But they shouldn’t have needed a pandemic to stop them.