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The Reserve Bank's local-incorporation policy


  • Willy Chetwin

    (Reserve Bank of New Zealand)


Foreign-owned banks play an important role in New Zealand’s financial system. This article discusses the Reserve Bank’s local-incorporation policy, which is one of the key elements in the policy framework to minimise the risks and maximise the benefits of hosting foreign-owned banks. The article identifies some of the benefits and risks of hosting foreign-owned banks; it discusses the local-incorporation policy rules and how the policy fits into the wider set of rules affecting banks; and discusses how the policy promotes the soundness and efficiency of New Zealand’s financial system, and avoids the damage to the financial system that could arise from the failure of a foreign-owned bank.

Suggested Citation

  • Willy Chetwin, 2006. "The Reserve Bank's local-incorporation policy," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 69, pages 1-10, December.
  • Handle: RePEc:nzb:nzbbul:december2006:3

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    References listed on IDEAS

    1. Leslie Hull, 2002. "Foreign-owned banks: Implications for New Zealand's financial stability," Reserve Bank of New Zealand Discussion Paper Series DP2002/05, Reserve Bank of New Zealand.
    2. Loretta DeSourdy, 2006. "The Reserve Bank of New Zealand Amendment Act 2006," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 69, pages 1-4, December.
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