Pressure on RBNZ? New Zealand Minister Sought Meeting With Former Governor Before Sudden Resignation

Mounting Pressure?

New Zealand Finance Minister Nicola Willis was pushing for a meeting with former Reserve Bank Governor Adrian Orr to discuss bank capital requirements in the weeks leading up to Orr’s unexpected resignation, newly released documents reveal.

This information, obtained through the Official Information Act, adds fuel to the speculation that Orr stepped down under pressure from Willis to loosen the bank’s capital requirements, a move she believes is contributing to higher borrowing costs.

A Request Denied

Willis’s office initially requested a meeting with Orr on February 7 to discuss bank capital settings. However, the RBNZ responded that Orr was unavailable due to a leave of absence and preparations for the February 19 Monetary Policy Statement.

Following subsequent requests, Orr politely declined, citing the importance of maintaining the Monetary Policy Committee’s independence during its deliberations. He suggested alternative options, such as a meeting after the Monetary Policy Statement, a written briefing, or discussions with other RBNZ staff.

Despite these suggestions, Willis persisted in her request for a meeting, ultimately prompting Orr to propose February 24 as a possible date, suggesting the attendance of the RBNZ board chair and deputy governor.

Powers and Funding

The documents also shed light on Willis’s interest in her powers to direct the RBNZ on prudential policy, specifically regarding section 68B of the RBNZ legislation. The Treasury explained that this section was effectively replaced by the Financial Policy Remit in 2021, which normalizes government influence on prudential standards.

Furthermore, documents reveal that Willis also inquired about the RBNZ’s five-year funding agreement, which ultimately resulted in a smaller funding allocation than the bank had requested from the government.

A Meeting Withheld

While some documents were released, the content of the February 24 meeting between Willis and Orr remains undisclosed. This meeting took place just nine days before Orr’s resignation, leaving many questions unanswered about the true reasons behind his departure.

The Aftermath

Since Orr’s resignation, the RBNZ has announced a review of the stricter bank capital rules that he championed. Orr himself has yet to publicly address the reasons for his decision.