The Government has decided to introduce insurance of retail bank deposits up to $50,000 per institution and says that will likely fully cover more than 90 per cent of depositors.
Finance Minister Grant Robertson said the deposit insurance scheme is one of a number of changes stemming from phase two of its review of the Reserve Bank Act.
Other changes give the RBNZ greater powers to monitor banks and hold directors and executives more accountable for their actions, a new governance board to oversee financial stability matters and measures to improve transparency at the Reserve Bank, including more oversight for the Auditor-General and the Ombudsman.
The Government will also introduce a financial policy remit outlining matters it wants the new governance board to have regard to when pursuing the Reserve Bank's financial stability objectives.
"New Zealand has a strong and stable banking system but it is regulated by laws that are 30 years old," Robertson said in a statement announcing the changes.