Finance Minister’s Meeting with Reserve Bank Governor Precedes Resignation

New Zealand’s Finance Minister, Nicola Willis, requested a meeting with former Reserve Bank Governor Adrian Orr to discuss the bank’s capital requirements just weeks before his unexpected resignation.

A document made public on Wednesday in Wellington revealed that Willis was also looking for guidance on how to direct the central bank regarding prudential policies.

Bloomberg sought all communications between Willis’s office, the Reserve Bank of New Zealand (RBNZ), and the Treasury Department from the month leading up to Orr’s departure on March 5. The emails and documents seem to support claims that Orr resigned under pressure from Willis to relax the bank’s capital requirements.

Orr has not publicly clarified the reasons behind his abrupt exit from his term. Since then, RBNZ has published a review of the stricter bank capital regulations that he initially backed.

Willis reached out on February 7 to “discuss the bank’s capital setting,” as indicated in an email from her office dated February 3.

RBNZ informed that Orr was on vacation that day and was preparing for the upcoming forecast week before the monetary policy statement set for February 19.

Willis’s office followed up with another meeting request on February 5, which was declined. RBNZ stated it would be inappropriate for Orr to meet with the Minister during the monetary policy discussions.

Orr emphasized in an email on February 4 that “Monetary Policy Week” is critical to maintaining the independence of the Monetary Policy Committee and protecting New Zealand’s economic reputation.

He also mentioned that discussions about bank capital are extensive and long-term, and the RBNZ has various staff capable of handling it. “It’s acceptable to communicate through post-MP briefings or written notes, or in urgent cases via non-MPC staff,” he noted.

Despite this, Willis persisted in her requests for a meeting within that week or the next to talk about capital settings.

Orr replied on February 5, stating they would not be able to meet until after the MPS deliberations but expressed a willingness to meet on February 17 or 18 for a regular discussion before final decisions.

He suggested that the RBNZ board president and lieutenant governor should join the meeting regarding bank capital, proposing February 24, which was later confirmed by Willis’s office.

On February 13, the Ministry of Finance communicated with the Minister’s office about inquiries regarding Section 68B of the RBNZ Act.

This section grants the government authority to direct the RBNZ on prudential policy, but it was replaced by monetary policy authority in 2021.

“Section 68B was rarely utilized—described as ‘nuclear selection’—but FPR is always effective. This integrates government policies as prudential standards and strategic intentions set by the RBNZ,” stated the document.

Further documents indicated that RBNZ’s five-year funding agreement attracted Willis’s attention in February. She later revealed that the bank received less funding from the government than initially requested.

Not all requested documents were provided to Bloomberg, and there was no information disclosed about the discussions during the February 24 meeting.

Nine days later, Orr resigned.