The Green Party is calling on the National Government to introduce sector-wide deposit insurance following Kiwibank’s withdrawal of its deposit guarantee.
Kiwibank announced to its customers yesterday that its deposit guarantee on savers’ money was ending on 28 February 2017. After February, no bank in New Zealand will offer protection of savers’ deposits.
“New Zealand is the only country left in the developed world that doesn’t offer savers’ deposit insurance to protect them against possible loss if their bank ever got into difficulty,” said Green Party Co-leader James Shaw.
“Savers in New Zealand face a possible ‘haircut’ to their savings if their money is needed to bail out their bank. This can’t happen anywhere else in the rest of the OECD.
“Australian and American savers enjoy deposit protection of their savings up to AUD$250,000. Canadian and European deposits are insured up to $100,000.
“We think $100,000 would be a fair level of protection for savers here too.
“Deposit insurance would also support the resilience of our financial system, stopping the likelihood of a bank run, which is a real risk according to the OECD.
“The absence of deposit insurance makes it politically difficult to avoid a taxpayer-funded bank rescue.
“Deposit insurance would cost savers around $5-10 a year to fund.
“Five to 10 dollars is a small price to pay to know that your savings are safe no matter what,” said Mr Shaw.