Wellington (Tuesday, 9 November 2021) The Reserve Bank of New Zealand (RBNZ) has no legal or democratic mandate for climate change, says a new report from think tank The New Zealand Initiative.

Climate of fear: How the Reserve Bank is overstepping its mandate documents serious breaches of the RBNZ's responsibilities as regulator of the financial system, including one instance of misconduct.

The RBNZ’s recent Climate Changed report included a strongly-worded threat to the institutions it regulates.

The RBNZ wrote (p32): “We will promote banking sector climate change capabilities by increasing supervisory intensity on entities that are not positively progressing their climate change capabilities.”

“That is an unconscionable statement from a regulator, and probably unlawful,” says the report’s author Senior Economist Matt Burgess. “The Reserve Bank cannot bully its way to lower emissions.”

“The Reserve Bank is threatening stricter regulations on companies if they do not follow its political agenda. The Bank has clearly overstepped its mandate,” says Mr Burgess.

Burgess says the RBNZ has not established climate change threatens the stability of the financial system. In fact, as recent media reports have shown, the RBNZ tried to bury in-house research contradicting its concerns about climate change.

“Climate change is real. But the Reserve Bank has misunderstood New Zealand’s climate change commitments and how emissions policies work. Its report does not even mention the Emissions Trading Scheme, a crucial oversight.”

“As a result, the Reserve Bank is importing ideas from other central banks which do not fit with policies here.”

“With looming inflation, rocketing public debt and elevated asset prices, the Reserve Bank should get back to its core responsibilities.”

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Climate of fear: How the Reserve Bank is overstepping its mandate is available to read here.

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