The Reserve Bank (RBNZ) admits it accidentally sent information about its funding for a lending programme (FLP) to financial services firms before it was supposed to.
In a statement on Wednesday afternoon, the RBNZ said it was "taking the matter seriously" and has engaged Deloitte to review its internal processes. However, it thought it was "unlikely to have provided anyone with a market advantage".
The information shared in a letter on November 11 contained details about the FLP and was emailed out a short time before it was made public in the November Monetary Policy Statement (MPS).
"The accidental disclosure was included in a letter sent to non-bank financial institutions to finalise a consultation process," the RBNZ says. "The letter confirmed the Reserve Bank's decision to introduce an FLP but did not contain specifics of the FLP. The information should not have been communicated until after the 2pm release, but was sent 45 minutes early."
What is the funding for the lending programme?
The FLP is aimed at lowering borrowing costs for households and businesses.
This will be achieved by giving banks access to a pool of funding at the Official Cash Rate (0.25 percent), making it cheaper for them to lend. The desired outcome is to reduce interest rates, including deposit and borrowing rates, to encourage people to borrow and invest.
What was in the letter?
The letter confirmed the FLP would be taking place, and noted the impact it might have on the non-bank deposit-taking (NBDT) sector - which might not have the collateral to meet eligibility requirements.
"A number of institutions in the sector have raised concerns over the competitive impact of the FLP on NBDTs," deputy governor and general manager financial stability Geoff Bascand said.
"A key concern is that the programme will lower funding costs for large banks, and leave the NBDTs at a competitive disadvantage - hampering their ability to provide credit to certain areas of the financial system.
"We understand this concern, and hope you draw comfort from our expectation that the FLP will lower funding costs by a similar degree for both large banks and NBDTs."
Bascand said the RBNZ expected the FLP to lower interest rates in two ways; lowering the direct cost of funding as market sources are substituted with cheaper FLP funding and decreasing demand for other sources of funding which would lower the average interest rate.
This information could have provided the financial firms which received it a market advantage, although the RBNZ thought the information provided "limited".