Reserve Bank of New Zealand (RNBZ) will soon launch a review of the country’s banking regulations to streamline them in the wake of Basel III norms.

The central bank also plans to create a banking regulatory framework which is easy to use, and is as cost-effective as possible, while supporting a strong financial system.

During a speech to the NZ Bankers’ Association, the Reserve Bank deputy governor Grant Spencer released further details of the Reserve Bank’s plan to review prudential regulation.

Spencer said: "It is sound practice to review any regulatory regime from time to time, particularly when it has been subject to a period of rapid change. We see the review as an opportunity to improve our regulatory framework and the processes we use to develop regulation."

The central bank clarified that the review is not intended to redesign the basic building blocks of the regime that is appropriate and necessary for a sound and efficient financial system. The review of prudential regulation will shape and thin the stock of regulation.

"The Reserve Bank agrees with the general international consensus on financial system regulation, but retains flexibility to adapt regulations to suit New Zealand conditions," Spencer added.

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The review of prudential regulation is expected to last approximately one year.