The Reserve Bank of New Zealand and the Treasury have announced changes to the bank deposit guarantee scheme, including putting a cap of $1 million on guaranteed deposits.
On 12 October New Zealand and Australia announced the guarantees on bank deposits to help protect their banks from the impact of the global financial crisis and competition from foreign banks, which already had their deposits guaranteed.
New Zealand announced on Wednesday it will cap its guarantee at $NZ1 million per depositor per institution.
Treasury secretary John Whitehead and Reserve Bank governor Alan Bollard said that the changes to the scheme are mainly technical.
There will be new charges for banks and non-bank deposit takers on any new business they attract. The lower an institution's credit rating, the higher the cost of the scheme.
Mr Whitehead and Dr Bollard say the purpose of the scheme is to ensure continuing confidence in New Zealand's financial system.
The Treasury says it expects to be in a position to start announcing approved guarantees for banks from Tuesday, and for non-banks after that.
Australia announces changes
Australia also announced on Wednesday it would amend blanket guarantees for large bank deposits. The federal government said it would now impose a fee for the guarantee for deposits bigger than $A1 million.
Australian Treasurer Wayne Swan said the government's blanket guarantee on deposits had helped stabilise Australia's financial system in the face of the global financial crisis, and had the full support of regulators.
Prime Minister Kevin Rudd followed up with a $A7.3 billion economic stimulus package to help guard the country against the global slowdown, spending about half of the forecast budget surplus for 2008/09.
The government has said it expects growth to slow and unemployment to rise, but has yet to update official forecasts, which will be released by mid-November.
Australia's central bank has slashed official interest rates by 125 basis points since September to help cushion the economy from the turmoil, despite inflationary pressures in Australia.
The Reserve Bank of New Zealand is expected to review its benchmark interest rate on Thursday. Economists expect it to cut rates by as much as one percentage point.
The central bank last cut the Official Cash Rate by half a percentage point to 7.5% on 8 September.
