Wholesale Deposit Guarantee Likely
According to statements from Finance Minister Michael Cullen made during a television interview on the 19th of October, the newly proposed bank guarantee scheme could soon be extended to wholesale deposits.
As it stands at this moment in time, the proposed retail-banking guarantee scheme does not extend to funds attained from international wholesale markets. According to Michael Cullen the government has been looking at the possibility of making this a reality, although since the New Zealand banking system was not undergoing any sort of crisis at the moment, they have to time to properly create and implement appropriate measures.
Concerns arise with the proposed scheme whereby it would seem that it would give virtual monetary guarantees to offshore stakeholders, effectively transferring the benefit out of New Zealand. While he acknowledged the difficulties, Michael Cullen also did make the point that there is a necessity for the New Zealand government to implement some measures to protect the New Zealand financial sector.
Jeanette Fitzsimons, leader of the Green Party, confirmed her party’s support of the scheme the following. She also claimed to want to see a higher collaboration between parties within Parliament in the support of this scheme. Though she did mirror the concerns of Michael Cullen, with the possibility of such a large benefit being exercised exclusively by overseas bodies.
National Party leader, John Key also supports the proposal, although with much less trepidation and more enthusiasm than Jeanette Fitzsimons. His reasoning, according to statements issued on the morning of the 20th of October, being that countries like Australia who are already implementing similar systems will find it proportionately easier to access money.