Govt will help us find forgotten money – it will also enable the RBNZ to hire more staff to (hopefully) protect our finances

Latest from the Beehive –

Our immediate reaction was to be grateful on learning from a Beehive press statement headline that  the government is Protecting Kiwis with stronger financial supervision

Our second reaction was to wonder exactly how it intends strengthening this supervision.

The answer is that a new five-year funding agreement with the Reserve Bank will provide it with an annual average budget of $115 million, up $35 million from this financial year.

The bank expects staff levels to rise 58% to 468 during that period.  To do what?

Not only does the government intend protecting our financial wellbeing, however.  It also aims to boost the finances of some people by introducing a law change to make it easier for forgotten funds in institutional accounts to be returned to their rightful owners.

Revenue Minister Stuart Nash has introduced an amendment to the Unclaimed Money Act 1971. It will update the rules controlling forgotten sums of money held by banks or other financial institutions and professional bodies.

The long list of institutions which hold money on behalf of clients includes banks and building societies, lawyers’ trust accounts, sharebrokers, real estate agents, auctioneers, insurance companies, motor vehicle dealers and company liquidators. Continue reading “Govt will help us find forgotten money – it will also enable the RBNZ to hire more staff to (hopefully) protect our finances”

The RBNZ’s staff numbers surge – but the governor warns he wants more (especially for supervision)

Staff expenses at the Reserve Bank  – which have increased by an average 4.4% a year since 2009/11 – surged by 14.8% in the 12 months to 2018/19.

Total staff numbers increased by an average 3.4 a year during those nine years  but shot up by 19  in 2018/19 from 255 to 274.

But wait.  We need more – or rather, the governor says he needs more.

The Taxpayers Union reckons we should ignore him.

According to the Dominion-Post, Adrian Orr this week told a parliamentary select committee the bank is anticipating “a much more significant increase” over its next five-year funding period.

“The begging letter is on its way to the Treasury for inspection and then we will be going into our funding agreement discussion with the Minister of Finance in mid-March,” he said.

Orr told Parliament’s Finance and Expenditure select committee he was not comfortable talking about the scale of the possible resourcing increase ahead of those discussions, but said it was “30 per cent perhaps”.

“The biggest percentage change in staff would be in supervision.” Continue reading “The RBNZ’s staff numbers surge – but the governor warns he wants more (especially for supervision)”

How the management of monetary policy (and other RBNZ activities) are being steeped in Maori mythology

Acculturation – the cultural modification of an individual, group, or people by adapting to or borrowing traits from another culture or a merging of cultures – is increasingly evident in this country’s public agencies.

The Reserve Bank of New Zealand has not escaped the process.  In July 2018, soon after Adrian Orr became the governor, the Otago Daily Times reported the new  head of the country’s august central bank was planning to shift the mindset of the institution towards better embracing the rich cultural diversity of the country.

Since he had taken up the post (the ODT reported)

… phrases like tikanga Maori and te reo have begun to feature prominently on its priority list.

And:

Under his watch, the bank’s Statement of Intent, where it sets out its strategic objectives to the Government for the next four years, highlights its intent to embed  te reo and tikanga Maori into the culture of the bank. Continue reading “How the management of monetary policy (and other RBNZ activities) are being steeped in Maori mythology”

Crackdown on the banks was not as severe as had been feared – RBNZ board might have had a muffling effect

The roll of drums sounded  for  many  months — but the  Reserve  Bank’s call  on  how  the country’s banks could  withstand  a  one-in-200-year financial  crisis  landed  with  less of  a bang, more  like a whimper,  last week.

At least, that’s how  the  markets  interpreted   the  decision of the Governor,  Adrian  Orr,  whose  early  belligerence  had struck terror  into  the boardrooms of  trading banks,  particularly those with  headquarters across the  ditch.

By Monday, economists decided the changes, being softer  than  originally  proposed,  would  prove less of  a headwind  to the economy than   initially envisaged.

The overall  level  of  capital  required    will  still  have  to  rise  from a minimum of  10.5%  currently to  18% — -but the banks  will have longer to raise the capital. And  the RBNZ softened  what  it will consider as tier one  capital  to include redeemable preference  shares, offering  a cheaper  way to  raise money. Continue reading “Crackdown on the banks was not as severe as had been feared – RBNZ board might have had a muffling effect”

RBNZ board is pressed to put many hard questions about surprise slashing of the OCR

Michael Reddell, on his Croaking Cassandra blog, has scolded the Reserve Bank Monetary Policy Committee about its prowess – or lack of it – in the communications department.

His concerns were raised by the committee’s decision – announced yesterday along with the latest Monetary Policy Statement – to lop the Official Cash Rate by 50 basis points to 1 per cent.

As Westpac commentators noted:

“This was a stunning decision – in the history of the OCR, the only times the OCR has been cut by 50bps or more have been after the 9/11 terrorist attack, during the GFC, and after the Christchurch earthquake. We are very surprised that the RBNZ decided to cut 50bps in today’s environment.”

Reddell was surprised, too, and is urging the RBNZ’s board to ask hard questions about just what went on before the announcement. Continue reading “RBNZ board is pressed to put many hard questions about surprise slashing of the OCR”

Fallout from the Hisco affair is bound to spread to RBNZ moves to regulate bank capital

Pressure may be mounting for  a  broad  inquiry into  the banking industry following recent incidents involving  the biggest trading  bank in NZ.

Agriculture  Minister  Damien  O’Connor  said this week  banks  are  “bullies”  (according to a  Radio NZ report).  It’s a  sentiment shared  by  many  New Zealanders.

This  sentiment has  been rekindled by the departure  of ANZ’s CEO  David Hisco  who, it had been found, passed off charges for chauffeur-driven cars and the cost of storing his wine collection as business rather than personal expenses.

ANZ suffered a couple of regulatory blows last month with the Reserve Bank forcing it to hold more capital against housing and farm lending from June 30 and to use the standardised model for calculating its operational risk capital (ORC) rather than its own internal model.  That’s because it had been using a modified internal model for calculating ORC since December 2014 without first getting RBNZ approval. Continue reading “Fallout from the Hisco affair is bound to spread to RBNZ moves to regulate bank capital”

Acculturation at our central bank – Orr branches into spiritualism (maybe to give more mana to money)

Our financial ecosystem seems well and truly rooted.

Point of Order doffs its cap to Michael Reddell for alerting the public to the Reserve Bank of New Zealand’s plunge into political correctness.

Reddell draws attention, too, to the awful reality that a great deal of government improvidence goes undetected by the Point of Order Trough Monitor, which limits its surveillance to the profligacy of the inhabitants of the Beehive.

In particular, he has highlighted the Reserve Bank’s recruiting a “cultural capability advisor Maori” and wonders what this bureaucrat will do in an agency with three main jobs, none of them involving direct dealing with the general public – Maori, European, Chinese, Mexican or whatever:

  • the Bank issues bank notes and coins.  That involves purchasing them from overseas producers, and selling them to (repurchasing them from) the head offices of retail banks;
  • it sets monetary policy.  There is one policy interest rate, one New Zealand dollar, affecting economic activiity (in the short-term) and prices without distinction by race or culture.  Making monetary policy happen, at a technical level, involves setting an interest rate on accounts banks hold with the Reserve Bank, and a rate at which the Reserve Bank will lend (secured) to much the same group.  The target – the inflation target, conditioned on employment (a single target for all New Zealand) – is set for them by the Minister of Finance.
  • and it regulates/supervises banks, non-bank deposit-takers, and insurance companies, under various bits of legislation that don’t differentiate by race or culture.

Continue reading “Acculturation at our central bank – Orr branches into spiritualism (maybe to give more mana to money)”

US monetary policy experts ask if it’s time to change the 2% inflation target – and what are the options?

440px-Grant_Robertson
Can we teach the Americans something about this targeting caper?

The Reserve Bank Act was nearly 30 years old, Finance Minister Grant Robertson said after he and Reserve Bank Governor Adrian Orr signed a new Policy Targets Agreement late in March.

A single focus on price stability had generally served New Zealand well over those decades, he said. But the New Zealand economy and monetary policy practices had changed substantially since it was enacted.

The new agreement accordingly was modified to require monetary policy to be conducted so that it helps to support maximum levels of sustainable employment within the economy. The US Federal Reserve has long had employment among its monetary policy considerations.

Another American practice has been adopted by the Labour-New Zealand First govt – monetary policy decisions by committee. Continue reading “US monetary policy experts ask if it’s time to change the 2% inflation target – and what are the options?”