However, this is a new approach to prudential policy and as such we are developing, along with Treasury, an explicit macro-prudential governance framework to be agreed with the Minister of Finance as a basis for policy decisions going forward. We expect that the Reserve Bank will take the lead role in implementing macro-prudential policy, subject to consultation with Government.
But the substantive issue of refinancing risk has been taken care of. One discussion has been whether the 5 percent trigger was needed or whether one should just refer more generally to the very unlikely event of a failed auction. The point is however that identifying a failed auction in practice is not very easy. A discretionary decision by authorities would probably be needed.