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Liquidity Policy Review Seeks Feedback On Significant Policy Issues

The Reserve Bank of New Zealand - Te Pūtea Matua is seeking feedback on the second stage of its liquidity policy review.

Deputy Governor and General Manager of Financial Stability Christian Hawkesby says our liquidity policy is one of a number of measures that help ensure deposit takers in New Zealand remain in sound financial condition, in both good times and in times of stress.

“Our liquidity policy ensures that deposit takers are able to provide depositors with their money when they are entitled to it, and pay their creditors on time.

“Our liquidity policy does this by requiring deposit takers to carefully monitor and manage their ability to make payments to others, and also by requiring them to have a minimum amount of cash, or assets (like New Zealand Government Bonds) they can sell for cash, to make these payments,” Mr Hawkesby says.

This stage of our liquidity policy review contains proposals on some of the significant policy issues related to the review, including the eligibility criteria for liquid assets, the potential adoption of international standards, and how liquidity requirements could be applied across deposit takers in a proportionate manner. The first stage of the review proposed and finalised six key principles that are now being used to guide the review.

Feedback on this, second stage consultation paper, as well as any other issues related to the review, is due by close of business on 12 May 2023.

We intend to issue at least two more consultation papers. The third consultation paper will be issued later this year and seek feedback on further policy issues, with the fourth consultation paper containing the proposed final liquidity policy set to be issued in 2024.

More information

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Review of Liquidity Policy (BS13)

Proposed approach to Liquidity Policy Review receives broad support, June 2022

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