Although our regulatory framework is somewhat less intrusive than that of many countries, it nonetheless contains most of the standard features. The IMF in its Financial Sector Assessment Programme (FSAP) review of the New Zealand financial system last year confirmed that we have a good model for host country supervision.
The centre-piece of the regulatory requirements is a requirement that banks in New Zealand be adequately capitalised. We apply the standard Basel I capital accord in much the same way as do other supervisors. In the case of overseas-owned banks, we require the bank in New Zealand to be sufficiently capitalised in its own right, with not less than 8 per cent capital.