Federated Farmers have urged the Reserve Bank to relax its stringent capital requirements for banks, arguing that the current rules are placing undue financial pressure on rural communities.
Introduced in 2019 by outgoing Reserve Bank Governor Adrian Orr, these regulations require banks to hold sufficient capital to withstand a “one-in-200-year financial event”.
However, industry leaders argue that these measures have made rural lending unnecessarily expensive, adding between 50 to 120 basis points to agricultural loans.
In real terms, this equates to a staggering $600 million in additional interest payments collectively shouldered by farmers. At an individual level, the burden is severe, with the average Federated Farmers member paying an extra $44,000 per year—money that could otherwise be reinvested in the growth of the agricultural sector.
Before the regulatory changes, banks were only required to hold capital reserves to weather a one-in-100-year financial crisis. Federated Farmers argue that reverting to this previous threshold would strike a more practical and economically sustainable balance.
The issue came under scrutiny this week when banking executives were summoned before Parliament’s banking inquiry. Under questioning, BNZ’s CEO confirmed that the Reserve Bank’s capital rules have pushed up interest rates for farmers by 1%, turning a 6.5% loan into a 7.5% financial strain.
Federated Farmers maintain that the Reserve Bank must recognise the detrimental impact of these policies on farmers, rural economies, and the broader financial landscape. Securing these regulatory changes, they argue, would mark a significant victory for the agricultural sector and help restore economic stability to rural communities.
Image credit: Nareeta Martin
Who Owns the Reserve Bank of NZ?
International Finance Agreement 1961
Who Owns the Government?
A clown show of crisis actors
Let’s call the Reserve Bank what it really is, – A CENTRAL BANK.
CONTROL OF THE WORLD LIES NOT IN THE HANDS OF KINGS, QUEENS, DICTATORS, PRESIDENTS, OR MONARCHS.
CONTROL OF THE WORLD LIES IN THE HANDS OF CENTRAL BANKS (BABYLON SYSTEM) WHO COLLECTIVELY CONTROL THE WORLD ECONOMY, THE FINANCIAL MARKETS, AND THEREFORE THE ENTIRE FINANCIAL SYSTEM. MOREOVER, THEY NOW CONTROL THE NARRATIVE AND THEREFORE THE FLOW OF INFORMATION.
Things that make me go hmmm… when the Governor of a private central bank steps down without notice and sufficient explanation.
What does Adrian Orr know? What highly contentious thing is coming Mr Orr?