The concern we have is that New Zealand banks might end up being penalised (for example, through higher borrowing costs if risk weights in the Capital Accord are linked to compliance with international standards). This could result if the process of assessing compliance with international standards becomes a ‘one-size-fits-all’, checklist, mechanical tick-the-boxes, approach.
In principle, this single European supervisor could help to prevent future crises by enforcing the same high standards irrespective of the banks’ country of origin and by taking transnational interdependencies into account. At the moment, it looks as though the ECB should carry out this task. This is, first of all, an expression of confidence in the competence of central banks.