KEY POINTS:
National leader John Key says he will support Government moves to ensure bank deposits if that becomes necessary, but says New Zealanders should have confidence in the banking system at present.
"I think if the situation deteriorates and it looks as though the Government needs to act in a way to ensure bank deposits, then I think that is necessary," he said yesterday.
Any such action would be a cross-party move and done in consultation with Australian authorities - five of New Zealand's major trading banks are owned by Australian banks.
"We are quite happy to be engaged in the process and we want to make sure New Zealanders can have confidence in their banking system."
But he thought New Zealanders should have confidence in it.
Mr Key said that after he and Opposition finance spokesman Bill English met Reserve Bank Governor Alan Bollard at the weekend they accepted that he had the tools he needed at the moment to underpin the banking system in New Zealand.
"But if there is a need to give him greater powers, then we are quite happy to work with him and the Australian authorities."
Finance Minister Michael Cullen was yesterday more reluctant to spell out how far the Government would go.
"We will do what is required to ensure the financial system is stable. That doesn't say guaranteeing everything in the system."
No Minister of Finance would promise "to save any bank under any circumstance".
Dr Cullen said he wanted to emphasise that New Zealand's financial system was "very, very sound indeed".
Dr Cullen said on Radio New Zealand's Nine to Noon that the Treasury and Reserve Bank had worked for some time on whether deposit insurance schemes should be brought into New Zealand.
"We don't want to be sending the signal that New Zealand financial sector is in trouble because it isn't."
New Zealand First leader Winston Peters supports a Government guarantee for the first $100,000 in New Zealand-owned banks - Kiwibank and TSB Bank.
Australia has just introduced plans for a guarantee of up to A$20,000 per depositor in the event of a banking collapse.
Bernard Hickey of www.interest.co.nz this week called for National and Labour to work with the Reserve Bank on a Government-backed deposit guarantee scheme to guarantee up to $100,000 in any licensed bank or registered building society until a deposit insurance scheme could be created.
