Still, it is uncertain just how useful this tool will be.21 In addition to some of the limitations affecting use of all time-varying instruments, such as judging when leverage or asset prices have become excessive, it is quite blunt. If “turned on,” it would apply to all large banks in all parts of the country.
The key developments you can expect to see from this will be more intense supervision, particularly in relation to verifying information received from insurers, and concluding enquiries more efficiently. We will be supported with more resources to be able to achieve these outcomes. As previously indicated, we are increasing our supervisory presence on the ground in Auckland.