At the same time, co-ordination need not mean that our requirements need always be identical to those of APRA. On some matters we may adopt different approaches. One that is starting to receive some publicity concerns the implementation of new Basel 2 capital adequacy standards for banks.
Under Basel 2, national authorities will have a choice between adopting a more sophisticated, internal model-based, approach to calculating capital requirements, or a simpler methodology that is closer to the existing Basel 1 regime. APRA has indicated that it proposes to apply the internal model-based regime in its consolidated supervision of Australian banks’ global operations, which, of course, encompass their operations in New Zealand.