Tag Archives: Reliability

New Zealand is facing a similar bank failure to Cyprus, islikely to adopt open bank resolution (OBR), which will see smalldepositors lose part their savings in favour of a big bank bailout,Green Party co-leader Russel Norman said. The country’s FinanceMinister Bill English supports the open bank resolution. ”Bill English is proposing a Cyprus-style solution formanaging bank failure here in New Zealand,” said Norman, addingthat the Reserve Bank is in the “final stages” of implementing anOBR system.New Zealand banks’ depositors will have their savings cut by acertain percentage needed to keep their bank afloat.The Green Party however has major doubts, that OBR tactics isappropriate here. Norman underlined, that few depositors canreasonably evaluate the reliability of their bank. “Not evensophisticated investors like Merrill Lynch saw the global financialcrisis coming,” he added.Norman believes that OBR policy is too radical saying few OECDcountries use it, preferring deposit insurance schemes. ”A deposit insurance scheme is a much simpler, well-testedalternative to open bank resolution. It rewards safe banks withlower premiums and limits the cost to taxpayers of a bank failure…[They] protect people’s deposits up to a maximum ranging from$100,000 to $250,000,” he said.Cyprus announced last week that it plans to impose a 10 per centtax on bank accounts as part of a 10 billion euro bailout by theEuropean Union. The news caused panic across the island as peoplerushed to cash machines to withdraw their savings. The Cypriotparliament will vote on the deposit levy on Tuesday. … Read More