Banks' wholesale guarantee at an end - English
New Zealand is likely to match Australia soon in ending the guarantee behind banks' borrowing of wholesale funds.
The Australian government announced yesterday it would end the guarantee, beginning March 31.
A spokesman for Finance Minister Bill English told NZPA the news from Australia was a welcome sign that financial markets had returned to relative stability.
"From New Zealand's perspective, given the global market improvements and New Zealand's success in raising wholesale funds without using the guarantee, the Government is considering withdrawing the wholesale guarantee facility.
"We will announce any changes as soon as any decisions are made and that could be a matter of weeks," the spokesman added.
The facility was established in November 2008 when the liquidity crisis hit the financial markets and it was envisaged then it was a temporary measure.
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Comments
why not move first?
Why do we always have to wait for the Australians? The NZ big banks never lost access to the international CP paper markets even during the height of the crisis (see http://www.lostsoulblog.com/2009/10/stuart-nash-mp-financial-alarmist-on... ).
We should be big enough to make our own policy, and have follow the rule of law instead of the rule of bailouts, moral hazard and time inconsistency.
Why not move first
David
I suspect, rather than it being an Oz/Kiwi thing, its to do with the fact that our banks are pretty much all Australian owned, and it would be strange for the NZ branches to lose their Govt guarantees before their parents (who are seen as a better credit risk in capital markets because they do fund at lower spreads) are deemed ready for it
Ending NZ guarantee on the
Ending NZ guarantee on the same time and date as Australia is an unavoidable move.
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