Government Must Protect New Zealanders Against Australian Bank Collapses

Friday 6th Jul 2001 Stephen Franks Media Release -- Economy

The Government must move to protect New Zealanders from Australian bank collapses, ACT Commerce Spokesman Stephen Franks said today.

"The Deputy Governor of the Reserve Bank has told us the Bank is working on ways to better protect New Zealanders from catastrophe if one of its foreign-owned banks collapses. This is reassuring, thoughtful evidence that the Bank is not sitting on its laurels as one of the world's best and most innovative.

"But buried in the detail is the acknowledgement that we are heavily exposed to the potential for Australian ruthlessness in looking after Australian depositors before New Zealanders get a look-in, after the collapse of an Australian bank. Australia's Banking Act says Australian depositors must be paid first.

"Our Deputy Governor refers to such rules as 'predatory national regulatory practices', and notes that both USA and Australia have them.

"The risk of having to wait for crumbs after Australian depositors should be in large print across the front cover of every bank operating as a branch here in New Zealand.

"Now that the Government has got such a frosty relationship with Australia after reneging on our defence obligations, the risks can come out in the open.

"The Government should pass laws enabling us to freeze Australian assets in the event of an Australian bank collapse, until it is clear that New Zealand depositors would be treated fairly and on an equal footing with Australian depositors.

"There may be other ways of taking precautions but it is not acceptable that the New Zealand Reserve Bank should be without the weapons that will at least ensure they have to be invited to the negotiating table when a major trans-national bank failure is being sorted out.

"The Prime Minister's clumsiness and our own bad faith in defence and other arrangements meant we had to accept the cancellation of our old 'family' status for immigration purposes. The risks from the 'predatory regulations' of Australian banks has been known by government for long enough. Further delay in dealing with it is negligent," Stephen Franks said.

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