The Reserve Bank of New Zealand’s (RBNZ) proposal to impose higher capital requirements on the local arms of Australian banks has been defended by John Vickers, the Bank of England’s former chief economist. He argues that the public benefit of safer banks outweighs any risks associated with such a move. Vickers adds that there will be little or no cost to the general public, particularly if the reforms are phased in over time. Meanwhile, the rent-seeking CEOs of Australia’s four major banks say the RBNZ’s capital reforms would result in higher interest rates and lower returns for shareholders. From The Australian:
John Vickers, a key architect of Britain’s post-crisis banking reforms, said the Reserve Bank of New Zealand’s move to lift the minimum capital ratio to 16 per cent from 10.5 per cent for the big four banks’ New Zealand subsidiaries was “perfectly sound”…
