- wide areas of supervisory interest. recent reviews in banking have looked at outsourcing arrangements and problem loan identification. in the insurance sector we have recently reviewed disclosure compliance. such thematic reviews achieve the combined purpose of compliance assessment, an improved understanding of risks by the supervisors, and the sharing of best practice across the industry. we are also looking to make greater use of targeted reviews by external experts in cases where serious non - compliance becomes apparent at particular institutions. 3 capital review in a speech in march i outlined the principles that would guide the current review of the capital adequacy framework for locally incorporated banks. 4 the two overarching principles were conservatism and simplicity. regarding the latter, we do not believe that new zealand ’ s relatively vanilla banking system warrants a high degree of complexity in its capital regime. we are leaning towards simplifying both the allowable capital instruments and the methods for measuring risk, though we are in the consultative phase and far from making any decisions. on the allowable capital instruments, many of you will have read our “ numerator ” consultation paper and we are keen to receive your submissions ( the consultation closes on 8 september ). 5 it proposes that we remove contingent debt instruments from regulatory capital, which were introduced to the framework in 2013 as part of basel iii. several factors lean us in this direction. there is an inevitable interaction between capital regulations and tax law, and an inherent tension with both sets of regulations when an instrument has both debt and equity characteristics. debt status brings about tax benefits whereas equity characteristics can see an instrument accepted as loss - absorbing capital from the reserve bank ’ s perspective. banks often seek to structure financial instruments to maximise the regulatory capital value of the instrument, while reducing 4 / 8 bis central bankers'speeches their tax liability. in our experience this often leads to complexity in instrument design, greyness around their true loss - absorbing capacity, and high compliance costs. further, it is questionable whether contingent debt has added any real economic value in terms of improving the risk - return options available to issuers and investors. two thirds of the contingent debt issued since 2013 has been by australian - owned banks to their parents, with the remainder largely issued to retail investors. the former may be driven mainly by the tax treatment, while retail investors receive an interest premium over deposits but may not appreciate the underlying conversion or write - down risk. in this context, we are concerned that contingent debt may be a financial innovation that is born

the information will be available at different levels of granularity to meet the needs of different users. 6 we see the current dashboard project as an important step in an on - going effort to support and enhance more effective and efficient disclosure for banks, insurers and other financial institutions. we are working closely with the banks and want to make sure we get it right. we expect to have the first dashboard published in the first quarter of 2018. looking further ahead, we see scope for ongoing advances in effective disclosure and private data management for supervised institutions. advances in digital services and data management tools are likely to offer a range of new opportunities for assessing and managing the prudential 5 / 8 bis central bankers'speeches performance and compliance of banks, non - banks and insurers alike. i expect technology will also offer increasing scope for automation in many of these processes. we anticipate greater use of “ big data ” in our supervisory assessments and in providing warning signs of crises or market concerns. but the day of full “ robo - supervision ” may still be some way off! macro - prudential policy macro - prudential is a relatively new policy area that we have so far implemented through lvr speed limits, applied in 2013, and modified in 2015 and in october last year. the objectives of the macro - prudential policy framework are set out in the 2013 memorandum of understanding between the governor and the minister of finance, which also outlines the instruments we can use to respond to emerging systemic risks. macro - prudential policies have been adopted by many countries in recent years as the underlying issues have been global in nature. the very low level of inflation and interest rates in most countries since the gfc has led to rapid increases in leverage and an escalation of systemic risk in property markets, particularly housing. macro - prudential policies in new zealand and elsewhere have been aimed at moderating systemic risk by directly limiting housing - related credit risk on banks ’ balance sheets. these instruments are more prescriptive than our baseline micro - prudential tools. they target a specific and significant systemic risk in the form of a leveraged and highly stretched housing market. in a booming housing market, such as we have seen in recent years, we believe the adverse externalities from rapid mortgage credit growth become accentuated, warranting the imposition of temporary macro - prudential measures such as the lvr speed limits. the bank currently has a consultation paper out on debt