What the fuck?!?!?
New Zealand is planning to effectively end government insurance of small deposits?
That's been the the foundation of banking in the industrialized world since the 1930s!
Such a plan would be literally unthinkable a week ago, and now we have reports suggesting that it is time to put your cash in your mattress.
Yes, I know that this is a press release from the NZ Green party, but they aren't the solipsistic Nixonesque who gave us Ralph Nader in 2000, and who take money from Republicans that the blokes in the USA are.
They actually have about 12% of the seats in parliament.
I am reproducing this in full, because it is a press release
National planning Cyprus-style solution for New ZealandSeriously, what the fuck?
Russel Norman MP
Tuesday, 19 Mar 2013 | Press Release
Contact: Russel Norman MP
The National Government is pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.
Open Bank Resolution (OBR) is Finance Minister Bill English's favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank's bail out.
"Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand - a solution that will see small depositors lose some of their savings to fund big bank bailouts," said Green Party Co-leader Dr Russel Norman.
"If a bank fails under National's plan, all depositors will have their savings reduced overnight to fund the bank’s bail out."
"The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.
"Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.
"While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.
"Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.
"If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference."
Dr Norman questioned the Government's insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.
"Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people's deposits up to a maximum ranging from $100,000 - $250,000," Dr Norman said.
"OBR is not in line with Australia, which protects bank deposits up to $250,000.
"A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.
"Deposit insurance will, however, require the Reserve Bank to oversee and regulate our banks more closely - a measure which is ultimately the best protection against bank failure."