Government to Investigate Impact of Reserve Bank Policies on Banking Competition

The New Zealand government has launched a broad inquiry into banking competition, focusing on whether Reserve Bank capital requirements are driving up borrowing costs and deterring new market entrants. This follows the Commerce Commission’s study on banking competitiveness, with the final report due next week. The inquiry, part of a coalition agreement between National and New Zealand First, will examine why banks prioritize mortgage lending over business and rural loans, and whether bank profits are justified, particularly in rural sectors. It will also explore barriers to competition, including regulatory impacts and the role of Kiwibank, while investigating the transparency of lending rates across different sectors. Finance Minister Nicola Willis has called for input from financial market regulators and key banking figures.

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