The Reserve Bank of New Zealand may lift the veil on some key (but until now private) banking industry data on large exposures, bank liquidity and loan to valuation ratios among banks.A little scrutinised, recent speech by Toby Fiennes, head of prudential supervision at the RBNZ, provided a contrasting assessment on topics on which the Australian Prudential Regulation Authority continues to take a conservative, if not dogmatic stance.Fiennes spoke to the New Zealand Bankers Association at the beginning of the month and outlined thinking at the local prudential regulator that sits in contrast to analysis of similar themes presented the same week by APRA chair, Wayne Byers, at the Actuaries Institute Banking Conference on the desirability of orderly bank failures in preference to disorderly bank failures.Both regulators recognise the dangers of a disorderly bank failure. As Toby Fiennes pointed out to the NZBA, the failure of one large financial institution can cause disruption throughout the economy but interconnectedness can also mean stress is quickly placed upon other institutions. Moreover, "the failure of a major bank could result in the public losing temporary, or even permanent, access to funds that they rely on to do basic transactions," Fiennes said.This observation highlights a significant philosophical difference in the regulation and supervision of the two Australasian banking systems.We reported last week on the very important role played by Additional Tier 1 and Tier 2 capital in facilitating an orderly bank failure but did not address the last component of the resolution framework identified by Byers.  That is, having a safety net to provide additional confidence in the resolution process.Byres, in his talk, played up the relevance to local banking policy of the safety net - that is, the Financial Claims Scheme in Australia - which provides depositors with guaranteed and prompt access to their funds, up to A$250,000. Deposits are not guaranteed in New Zealand.Instead, the Reserve Bank of New Zealand strives to ensure that market participants have sufficient information to monitor and influence New Zealand banks. The RBNZ views asymmetric information - where one party to a transaction has better information than the other - as a form of market failure.Moreover, Fiennes made the point that it is not enough for market participants to have information alone, they must have incentives to use and respond to the information. "Therefore, in supporting market discipline, we do not guarantee that no financial institution will fail, and we do not have explicit customer protection," he said.Furthermore, Fiennes noted that "since no financial institution is guaranteed by the government, there is more market pressure on institutions to compete on safety than there would be in a system with guarantees". Fiennes argued that there was international evidence showing that the absence of guarantees improves the overall stability of the financial system.Consistent with this philosophical approach, he explained, the RBNZ was now considering whether some information that is currently provided to it privately, could be publicly released. This may relate to large exposures, bank liquidity and LVR information.APRA