The Reserve Bank is calling for public submissions on how to control the use of covered bonds.
Covered bonds raise money against a pool of mortgages which are ring-fenced from other assets on a bank's balance sheet.
They are banned in Australia, but have been used widely in Europe for many years.
The BNZ became the first New Zealand bank to issue a covered bond, when it issued $425 million worth in June.
The Reserve Bank says the covered bond market is using informal guidelines at the moment, but some minor legislative changes could help to develop the market.
It also says that because covered bonds are new and largely untested in New Zealand, it would be prudent to limit their issuance to a relatively conservative 10% of a bank's total assets.
Submissions close on 19 November.
