Ministry of Business, Innovation and Employment
“In short, money is relatively cheap at the moment. That’s driven by a number of things, including the all-time low official cash rate, set by the Reserve Bank, which is currently at 0.25 per cent. Other factors include the cost of overseas funding, and Reserve Bank initiatives to increase the supply of money.
“One issue that will need working through is how the levies to fund the scheme are applied to participating entities,” said Roger Beaumont, chief executive of the NZ Bankers’ Association. “We support a risk-based approach to setting levies where lower risk entities, such as banks, pay lower levies because they are less likely to call on the scheme.”
Beaumont also said the deposit protection scheme needs to take into account the higher minimum capital requirements to be phased in for banks, which he says will come at a high cost and is intended to help banks withstand a one-in-200-year shock.
The Bankers’ Association supported a risk-based approach to setting levies, where lower risk entities such as banks would pay lower levies because they were less likely to call on the scheme, said chief executive Roger Beaumont.
The New Zealand Bankers’ Association supports risk-based pricing. CEO Roger Beaumont hoped this would see banks pay lower levies.
Another factor to take into account was higher minimum capital requirements to be phased in for banks, which came at a high cost and were intended to help banks withstand a one-in-200-year shock.
“We support a risk-based approach to setting levies where lower risk entities, such as banks, pay lower levies because they are less likely to call on the scheme.”
The deposit guarantee scheme announced today by the government will provide even more security for people who have bank deposits.
“Our banks are among the best capitalised and regulated in the world. We saw their strength and resilience through the global financial crisis, when there were no bank failures or bailouts in New Zealand. And, again recently, through the economic impact of Covid-19, where our banks were able to help affected households and businesses get through.
“New Zealand’s banks are a very reliable place to keep your money. Today’s announcement will provide depositors with an extra layer of security for their money in the unlikely event of a bank failure,” says New Zealand Bankers’ Association chief executive Roger Beaumont.
“A deposit guarantee scheme has been well signalled by the government. We look forward to working through the scheme’s detail.
“One issue that will need working through is how the levies to fund the scheme are applied to participating entities. We support a risk-based approach to setting levies where lower risk entities, such as banks, pay lower levies because they are less likely to call on the scheme.
“Another factor to take into account are higher minimum capital requirements to be phased in for banks. That comes at a high cost for banks and is intended to help our banks withstand a one-in-200-year shock.
“It will also be important to work through how the scheme fits in with the broader crisis management frameworks. That includes the Reserve Bank’s Open Bank Resolution policy, which can, among other things, draw on deposits to help keep a bank afloat in the case of a potential failure.
“We look forward to working with the government on the proposed legislation,” Beaumont says.
ENDS
“Some banks have individually made their own commercial decisions to phase out cheques. Some have announced dates for this, while at least one already does not accept or issue them. We’re not aware that any previously announced dates have changed.”