all of these tools in place, lvrs, dtis, interest rate floors, and enhanced prudential buffers, we would have a number of different ways of enhancing the resilience of the new zealand financial system to deal with different challenges as they appear. _ _ _ _ _ _ _ _ _ _ _ _ 11 on the prudential side, we are increasing the prudential buffers that banks are required to maintain. these prudential buffers will include a countercyclical capital buffer ( ccyb ). our approach to administering the ccyb is somewhat different to other countries, as we do not intend to be as active as other countries in adjusting it, as it will be fully incorporated in the capital requirements. this is consistent with our understanding that macroprudential policy tends to be less effective in managing the top and bottom of cycles but rather as through - the - cycle policy to add to overall resiliency. next steps looking ahead, there are two main next steps on our macroprudential agenda. consulting on additional tools to complete the suite we are currently consulting with banks and the general public on adding debt – to - income ( dti ) tools to our framework. some banks have expressed their preference for a floor on test interest rates instead of a dti. they have argued that an interest rate floor would be much easier for them to administer and it could, in the end, achieve similar results. while we have taken on their argument, a dti continues to be our preferred option. we feel that a dti produces a better control on the probability of default as a complement to the reduction in loss given default provided by existing lvr restrictions. by contrast, test interest rates are only one input into banks ’ serviceability assessments, and there is a risk that a test rate floor could be offset by adjustments to other elements of banks ’ calculations. however, an interim test rate floor could be put in place in the short term if necessary to address financial stability risks. we are currently looking for banks to be operationally ready to introduce a debt servicing tool by mid - 2023, if they are required12. enhancing our framework and communications for monetary policy, so - called ‘ neutral interest rates ’ provide a sense for whether the current settings for interest rates are expansionary or contractionary. in a world where macroprudential tools have turned out to be a more permanent feature of the landscape than we initially expected,

a breakfast discussion, with or without my college diet of eggs. so let ’ s get to work on the subject you have given me through your chairman, my friend georges leung shing : “ improving corporate governance in the financial services industry in the world and, in particular, in mauritius from the regulators ’ point of view ” not a narrow topic, i see. each one of these elements might perhaps justify a lecture in its own right, if not a book! corporate governance is far from being a narrow subject but going into the intricate details might, i fear, provoke some indigestion this morning. i thought that, in his introductory remarks, my friend georges has done a good job of setting up the boundaries within which to conduct our discussions on corporate governance. among the previous guests that your institute has invited at similar events in the past, i noted the names of alex berg and prof bob garratt, who are well - known for their contribution in the area of corporate governance. i also see in the audience my good friend, tim taylor, who chaired a major committee locally on the subject. i understand some time ago bis central bankers ’ speeches mervyn king – not governor king from the bank of england, but prof king from south africa – also paid us a visit and talked to many of you about corporate governance. he has been taking a key role in his own country, south africa, which has established a name for itself in the area of corporate governance, with the king i, king ii and king iii reports. what is corporate governance? the modern focus on corporate governance traces its origin at least as far back as the cadbury report. cadbury, with his own quaker background, would obviously be concerned with issues of corporate governance, with its ethical and moral dimensions. we don ’ t need to discuss corporate governance in great detail here this morning. your institute has been paying considerable attention to the subject over the years and you all know what it is. you are all aware of the various issues that crop up in this particular area. but i would all the same like to remind ourselves of the half a dozen or so key elements in corporate governance, which cut across different forms of organisation and areas of economic activity. those elements are : efficiency, openness, participation, accountability, transparency, probity, effectiveness and coherence. these key elements stand out in the different treatments of the subject in any report on corporate governance that you may come across. in addition to