Wellington. New Zealand's central bank called on Monday (01/05) for consultations on its review of capital requirements to counter risk to the country's banking sector, saying it retained an open mind about any new rules.

"However, in broad terms our aim is to agree a capital regime that maintains a very high level of confidence in the solvency of the banking system, while avoiding unnecessary economic inefficiency," the Reserve Bank of New Zealand (RBNZ) said in the consultation document.

RBNZ Deputy Governor Grant Spencer announced the year-long review in March to ensure regulations were appropriate in light of international rules and the high risk of any downturn in the property sector to New Zealand's financial system given most of the country's private debt is heavily tied up in housing.

The Basel III rules, which are aimed at making the global banking system more resilient following the 2008 financial crisis, include forcing banks to hold more and different types of capital to insulate themselves during downturns.

Internationally, regulators have developed new rules, known as "Basel III," aimed at making the global banking system more resilient following the 2008 financial crisis. New Zealand has already adopted some of these rules, which force banks to hold more and different types of capital to insulate themselves during downturns.

Consultations are open until June 9.

Reuters

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