National should act to protect New Zealanders’ savings

National should follow today’s advice from the International Monetary Fund (IMF) and implement deposit insurance to protect New Zealanders’ savings, the Green Party said.

The IMF’s Financial Sector Assessment Programme recommended today that introducing deposit insurance is “the best option” to strengthen the Reserve Bank’s crisis resolution framework.

“New Zealand is the only developed country in the world where we can lose our savings if our bank makes a bad decision, and that’s because we don’t have deposit insurance,” Green Party Co-leader James Shaw said.

“Most people would be alarmed to discover that the Reserve Bank can legally dip into their savings to bail out banks.

“For about $5-10 a year, people with savings could have peace of mind that their money won’t be used to prop up a failing bank.

“Americans and Australians are protected by deposit insurance on their savings up to $250,000, while people in Canada and the EU are protected up to $100,000, which we think would be an appropriate level for New Zealand.

“Deposit insurance has the added benefit of minimising the risk of runs on the banks, because people know their savings are protected.

“The IMF agrees that a safety net for savers makes sense. Now it’s up to National and the Reserve Bank to follow their advice,” Mr Shaw said.

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