New Zealand depositors could face a Cyprus-style tax on their bank accounts, as the government is planning to impose a similar strategy on its banks warns the country's Green Party.
New Zealand is facing a similar bank failure to Cyprus, is likely to adopt open bank resolution (OBR), which will see small depositors lose part their savings in favour of a big bank bailout, Green Party co-leader Russel Norman said. The country’s Finance Minister Bill English supports the open bank resolution.
"Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand," said Norman, adding that the Reserve Bank is in the "final stages" of implementing an OBR system.
New Zealand banks’ depositors will have their savings cut by a certain percentage needed to keep their bank afloat.
The Green Party however has major doubts, that OBR tactics is appropriate here. Norman underlined, that few depositors can reasonably evaluate the reliability of their bank. “Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming,” he added.