The Reserve Bank has decision-making responsibility for macroprudential policy implementation but must consult with the Minister and Treasury prior to the deployment of any instrument. The Reserve Bank has also undertaken to keep the public informed on macro-prudential policy through speeches and publications, with the main accountability document being our six monthly Financial Stability Report.
Four potential instruments have been put forward and these are summarised in Table 1. The four instruments work in quite different ways to reduce financial system risk. The countercyclical buffer and sectoral capital overlay work by requiring banks to hold additional capital buffers against potential shocks in asset markets or particular economic sectors.