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Near-status quo on RBNZ’s liquidity norms for NBDTs

The Reserve Bank has finalised liquidity policy for finance companies that will require the liquidity requirements to be quantified when it is included in the trust deed. The policy will also require the company and its trustee to take the liquidity of the borrowing group in to account along with the company itself.

Tuesday, September 21st 2010, 9:46PM

by Sophia Rodrigues

The policy is essentially maintaining the status quo but with an amendment on quantifying the liquidity requirement. It is also a far cry from liquidity policy for banks which are more stringent and prescribes liquidity and mismatch ratios.

The RBNZ said it will provide guidelines that can assist with the development of the quantitative liquidity requirement.

The policy was finalised after taking in to account submissions received to the draft policy which largely favoured maintaining a status quo or prescribing a measurement framework based on standard definitions from the RBNZ. The RBNZ believes the final policy will impose minimal cost on the industry while also allowing it to convey its view on good practice in the development of liquidity requirement.

The new liquidity requirement will commence on December 1 to coincide with the start date for the policy on minimum capital, related party exposure etc.


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