Source: ACT Party
After two reversals on tax in the past week, National has done another about-face, this time on deposit insurance.
Steven Joyce came out against deposit insurance last year, saying it ‘wasn’t necessarily going to work from New Zealand’s perspective.’ Amy Adams now believes it’s an issue ‘worth looking at.’
“A deposit insurance scheme would place taxpayers on the hook for banks’ risk-taking and increase instability in our financial system”, says ACT Leader David Seymour.
“The OECD been critical of the idea because it creates moral hazard, the idea that banks and depositors will engage in excessive risk-taking because they are insured against the risks.
“It reported that a ‘study of banking crises from the beginning of the 1980s to the mid-1990s found that the presence of an explicit deposit insurance scheme tends to increase the probability of such events’ and went on to say that deposit insurance can ‘increase the risk of imprudent behaviour by individual banks’.
“Does National genuinely believe in freedom, choice, and personal responsibility?
“And will it stand up for better economic policy in a principled way?