National Party leader John Key met Reserve Bank governor Alan Bollard on Monday afternoon, and afterwards said he was generally reassured about the bank deposit guarantee scheme.
The Government announced on Sunday it was to guarantee all deposits for two years for banks, credit unions and finance companies which opt into the scheme.
The scheme is similar to that announced by Australia on the same day, which guaranteed deposits in banks, building societies and finance companies for the next three years.
Mr Key said National had advocated protection for deposits, but said the Government had not consulted National about the decision, and accused Labour of playing petty politics on the issue.
After the meeting on Monday, Mr Key said Dr Bollard told him he would not rule out making further changes to the scheme.
John Key said he made it clear he would want to be consulted if that happened, but Dr Bollard told him it would be up to Finance Minister Michael Cullen to do that.
Mr Key said he remained worried that some troubled finance companies could eventually be covered by the scheme, recapitalise, take further deposits and start lending again.
He said he asked Dr Bollard what assurance the taxpayers of New Zealand would have that they are not underwriting some very inappropriate lending.
"The answer we got was that will be at the discretion of the trustees, and the Reserve Bank will be trying to monitor those trustees as carefully as they can."
Under the scheme, banks with deposits of more than $5 billion will be charged to have the guarantee, paying a fee of 10 basis points per annum on total deposits above $5 billion.
If all banks do take it up, it will leave the Government with a contingent liability of about $150 billion.
United Future warns against politicising crisis
The Government has been accused of unnecessarily politicising the financial crisis, in announcing its bank deposit guarantee at Labour's election campaign launch on Sunday.
United Future leader Peter Dunne said that although the scheme is welcome, the Government is making other parties play catch-up, which is not the most prudent way to bolster investor confidence.
"I sincerely hope that both the major parties are responsible enough not to try and see it degenerate into that "who can trump the other" type mentality, because...this is bigger than electoral considerations of particular parties in New Zealand."
Peter Dunne said if there had been multi-party discussions before the scheme was announced, issues such as whether the scheme should have included a guarantee of international borrowing could have been dealt with.
National questioned scope of scheme
Earlier on Monday, National questioned why the scheme did not also guarantee international borrowing by banks.
The party's finance spokesperson Bill English told Morning Report the problem faced by banks relates mainly to their ability to borrow money from overseas.
While Australia has also guaranteed international borrowing by banks, the New Zealand scheme does not offer the same guarantee.
"We'd like to know the answer to why the New Zealand scheme doesn't offer that guarantee because that's the real and more immediate problem that the banks face," said Mr English.
Mr English also said National would be looking for an undertaking that, given the proximity of the election, the party would be fully involved by the Government in any futher policy discussion.
After the briefing at the Reserve Bank on Monday afternoon, Mr English told Checkpoint the Bank's governor Dr Bollard had given some answers that National will pursue. He said there will be another briefing with the Reserve Bank.
Guarantee important - Cullen
Finance Minister Michael Cullen said he had to move quickly on the scheme on Sunday, when it became clear that Australia was bringing forward its scheme, which was more extensive than previously considered.
He said he gave approval for a briefing to be given to National leader John Key and finance spokesman Bill English, but that was late in the day.
Dr Cullen said the Government guarantee is important to prevent deposits leaving the country.
"There is a risk that if we're the only country which isn't offering any kind of guarantee, particularly now Australia's moved in that direction, then there is some risk that people might start transferring funds into Australian-based organisations", he told Morning Report.
Michael Cullen said a Labour Government would consider making the guarantee a permanent scheme when it is a reviewed in one year.
