I’ve been a little slow to get round to much comment on the Reserve Bank Governor’s proposals to require banks to fund a much larger share of their balance sheets with equity capital. These aren’t small changes: from a starting point where they more or less accept that New Zealand bank capital ratios are already higher than those in most advanced countries, they want to compel banks incorporated here to adopt capital ratios that would be higher than (almost?) anywhere else in the world (includding, notably, higher than in Australia).
I had a couple of initial posts (here and here) immediately after the consultative document was released, and one a couple of weeks ago on the way in which the Bank has continued to discount the results of demanding stress tests it has required banks to undertake. Since I wrote that post the Reserve Bank has…
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Utopia, you are standing in it! 
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