John Key MP
National Party Leader

1 November 2008

Key welcomes wholesale guarantee security

National Party Leader John Key has welcomed moves to shore up the security of the Kiwi economy with the wholesale bank guarantee announced today.

“National obviously welcomes moves that will offer Kiwi families and the economy more security in uncertain times. The wholesale guarantee was a necessary extension to the banking guarantee programme given the moves taken by others.”

On October 19 Mr Key said: ‘There is a risk that local financial institutions will decide to shift some wholesale deposits out of New Zealand banks and place them in Australian banks where their deposits will be guarantee … this means that the banks would, over time, have less money to lend to New Zealand businesses and New Zealand households, and that lending would become more expensive’.

“The improvements to the Kiwi protections announced today are important.”

Mr Key has also welcomed the assurances offered by trading banks that they will show compassion for Kiwis who find themselves in tough times.

“Just as the Government bank guarantee is designed to protect confidence and stability in the economy, I said just yesterday that I expected the banks to take similar steps to maintain confidence and stability.

“My expectation is that in light of the Government guarantee to banks, banks themselves will be very careful about the manner in which they deal with customers who may, as a consequence of the global financial crisis, find it hard to meet their obligations.”

Mr Key says National has been kept informed of developments and has received regular briefings from Treasury and Reserve Bank officials.

Ends

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