• Source: 1 NEWS
Finance Minister Grant Robertson says Cabinet has finalised new measures aimed at protecting New Zealanders’ interests in the banking and financial system. File image of $50 and $100 notes. Source: 1 NEWS
The new measures include guaranteeing deposits of up to $100,000 per eligible institution.
In a statement this morning Robertson says this number was increased from $50,000 after feedback and will fully protect 93 per cent of depositors.
The reforms will also include a new process for setting lending restrictions, such as loan-to-value ratios.
Robertson said the changes, which are the final part of a comprehensive review of the Reserve Bank of New Zealand Act, have been the subject of extensive consultation.
Hon Grant Robertson
Cabinet has finalised a package of new measures to protect New Zealanders’ interests in the banking and financial system, including guaranteeing deposits of up to $100,000 per eligible institution.
These measures, the final part of a comprehensive review of the Reserve Bank of New Zealand Act, have been the subject of extensive consultation. They will help protect New Zealand’s financial system and wider economy from damage that could be caused by excessive risk taking by the deposit taking sector and any resulting failures of institutions, Grant Robertson said.
“While New Zealand’s financial system is sound and well positioned to withstand the stress posed by COVID-19, these reforms ensure the Reserve Bank is better equipped to protect and promote financial stability in the future.
In 2019 the Government agreed to impose a levy on banks to pay for it, depending on the risk they pose. The Government would then top-up the rest.
The Government originally proposed a $50,000 limit for deposit protection, but Robertson says after feedback from the banking sector it has been increased to $100,000 to protect more New Zealanders. When enacted, these measures mean individuals will have up to $100,000 of their deposits in any eligible institution guaranteed in the event of the failure of an institution, Robertson said on Thursday. The aim is to have deposit insurance up and running in 2023.
The deposit insurance will cover banks, credit unions, building societies, and finance companies that are eligible to be licensed deposit takers.
Press Release – The Treasury A Cabinet decision to adopt the final measures resulting from the Reserve Bank Act Review will see drafting commence for new legislation to be known as the Deposit Takers Act. The measures announced by Minister of Finance Hon Grant Robertson will …
A Cabinet decision to adopt the final measures resulting from the Reserve Bank Act Review will see drafting commence for new legislation to be known as the Deposit Takers Act.
The measures announced by Minister of Finance Hon Grant Robertson will promote financial stability and protect deposits held in both bank and non-bank institutions. They conclude a comprehensive review of the Reserve Bank of New Zealand Act, and build on reforms already confirmed to update the objectives and decision-making processes of the Reserve Bank.
Source: New Zealand Treasury:
A Cabinet decision to adopt the final measures resulting from the Reserve Bank Act Review will see drafting commence for new legislation to be known as the Deposit Takers Act.
The measures announced by Minister of Finance Hon Grant Robertson will promote financial stability and protect deposits held in both bank and non-bank institutions. They conclude a comprehensive review of the Reserve Bank of New Zealand Act, and build on reforms already confirmed to update the objectives and decision-making processes of the Reserve Bank.
The new Deposit Takers Act will create a single regulatory regime for all bank and non-bank deposit takers (such as building societies and finance companies). It will also introduce a new deposit insurance scheme that will protect up to $100,000 per depositor, per institution in the event of a failure.