Sina US Stock News reported on the 5th, Beijing time, that New Zealand will require banks to increase their capital by 20 billion New Zealand dollars (13 billion US dollars) over the next seven years to better help the economy withstand future shocks.

The Bank of New Zealand said in its final decision released in Wellington on Thursday that by 2027, large banks in New Zealand must increase the share of high-quality capital in risk-weighted assets to 16%. This is in line with the level proposed almost a year ago, but the time period for banks to make adjustments is longer than the five years initially proposed.

“Increased capital in the banking system allows banks to better withstand economic shocks and maintain good and long-term customer outcomes,” Bank of New Zealand Governor Adrian Orr said. “Increased capital can also reduce the possibility of banks going out of business.”

Banks may respond to new capital requirements by raising borrowing costs and limiting credit investment in high-risk sectors such as the dairy industry, which could impact New Zealand's economic growth. The four largest banks in New Zealand are all owned by Australian parent companies. They previously said that if the Bank of New Zealand advances this plan, they may have to reduce their operations in New Zealand.