I want to promote an antidote to the moral hazard created by asymmetric payoffs, implicit or explicit deposit insurance and regulatory capture. Finally I want to summarise recent policy initiatives we have taken to enhance the value of disclosure and underpin market discipline. The New Zealand regime in brief Let me briefly remind you of New Zealand's approach to banking supervision.
While securitization may serve useful economic purposes having nothing to do with regulatory arbitrage, a properly structured securitization conduit can assist the sponsoring bank in lowering its effective regulatory capital requirement against a group of assets or other risk positions.