Minister of Finance Hon Grant Robertson has announced a new scheme that would promote financial stability and protect deposits in bank and non-bank institutions.
According to the Reserve Bank of New Zealand (RBNZ), the new Deposit Takers Act (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 in banks and financial institutions in the event of failure.
RBNZ Governor Adrian Orr said the new Act will broaden and clarify the scope of RBNZ’s role, which has evolved significantly since it began prudentially regulating banks over 30 years ago. It also modernises the central bank’s regulatory processes and instruments.
“The Reserve Bank is responsible for regulating deposit takers to help ensure their safety and soundness, in line with our mandate to promote the prosperity and wellbeing of New Zealanders,” Orr said.
“The reforms also provide important new enforcement tools which will help us to manage emerging issues and an enhanced crisis management framework to effectively respond to any failures and minimise the impact on the financial system, the economy, and society.”
Secretary of the Treasury Dr Caralee McLiesh commented that financial stability helps protect Kiwis’ savings, reduces unemployment risks, and enables confident participation in the financial system.
“The Bank will continue to independently set prudential policy, subject to strengthened accountability and transparency requirements and a requirement for it to have regard to the government’s Financial Policy Remit,” McLiesh said.
The RBNZ will lead the implementation of the new Deposit Takers Act. It will prioritise deposit insurance ahead of the rest of the Act coming into effect and expects the scheme to be up and running in 2023. The next opportunity for further public input will be an exposure draft of the Act later this year.