EDITORIAL:

The problem with trying to second guess the financial markets is that often you never know until it's too late.

Reserve Bank governor Adrian Orr leaned on this as part of his pitch to usher in new bank capital requirements, even drawing on his early experience in the forestry industry to highlight near misses that might have resulted in worker deaths.

The fact is, very few people can predict with any certainty when the next financial calamity will occur, not to mention the severity and whether local banks can cope with a one-in-200 year event for example.

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So the major banks are going to have to raise about $20 billion and probably increase borrowing levels by up to 60 basis points - depending on who you listen to.

That's going to have consequences for consumers and the economy in the form of higher interest rates, although not as big as previously thought due to the concessions in the final decision released this week.

In allowing some of the increase in capital to come from preference shares rather than common equity and retained earnings, the central bank has opened up a new product for New Zealand investors to tap into.

There's plenty of money sloshing around looking for a home and it would be good if the New Zealand Superannuation Fund, ACC and KiwiSaver funds fill their boots with a decent chunk of the $9 billion that could be raised through preference shares.

That way, more New Zealanders could share some of those huge profits the Aussie banks make from these shores each year.