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Andrew Body: Financial Markets and Banking Expert on the Reserve Bank's changes to banks' capital holding requirements
Description
Hopes a Reserve Bank move will translate to better prices for borrowers might be overly optimistic.
It is changing the mix of capital banks are required to hold, aiming to reduce funding costs and freeing up around $5 billion in equity across the sector.
It’s also targeting closing the gap between bigger and smaller banks, making the market more competitive.
Financial Markets and Banking Expert Andrew Body told Heather du Plessis-Allan that the change might result in a couple more chicken dinners for your average borrower, but nothing substantial.
He says the big deal here is competition, which will require political leadership like we’ve seen in housing, education, and health to solve.
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