WELLINGTON, June 24 (Xinhua) -- New Zealand Coalition Government announced Monday that it moves to make New Zealand's banking system safer for customers through a new deposit protection regime, and work to strengthen accountability for banks' actions.
The government is proposing a limit between 30,000 New Zealand dollars (19,835 U.S. dollars) and 50,000 New Zealand dollars (33,058 U.S. dollars) for the deposit protection regime. This would cover 90 percent of individual bank deposits in New Zealand, which is similar to international schemes. It follows consultation with the sector.
The in-principle decisions are part of Phase 2 of the Review of the Reserve Bank Act, which is making sure the 30-year old laws regulating New Zealand's banking system are up to scratch.
"Now is the right time to check we have the tools to make sure banks meet their obligations to New Zealanders, and the powers to enforce them," Finance Minister Grant Robertson said.
"The government is also making sure New Zealand follows international best practice for promoting public confidence in our banking system, including on the issue of depositor protection," Robertson said.
The Review of the Reserve Bank Act was agreed in the Coalition Agreement between Labour and New Zealand First. The Coalition Government has already delivered on Phase 1 of the review, by updating New Zealand's monetary policy settings to require the Reserve Bank to focus on employment outcomes as well as price stability.
Cabinet signed off an in-principle decision Monday to introduce a deposit protection regime in New Zealand as a result of work under Phase 2 of the review.
"New Zealand has been an outlier for many years in that we don't have a formal deposit protection regime to support Kiwis if a bank were to fall over," Robertson said.
"Our banks are safe and sound. However, the OECD and IMF have said that our banking system might be more vulnerable in a crisis because we don't have a deposit protection regime. A deposit protection regime will increase public confidence in the banks," Robertson said.
The government is also making sure bank regulators in New Zealand have the right tools to hold the banks and their executives to account.
Final decisions on the full details of a deposit protection regime and strengthened accountability standards will be announced in early 2020.
