Here’s something I suspect most people in NZ don’t know, and should.
The money they are storing safely in the bank in low-interest term deposits, that low risk, low return money stashed away for a rainy day – its not safe.
New Zealand has no deposit guarantee for money held in a bank, nothing, zero…
In Australia, for example, such a scheme fully protects depositors up to A$250,000 per depositor per bank. In Europe, the protection is 100,000 Euro per depositor. In the United States, it is US$250,000.
New Zealanders have no protection in the case of bank failure. In fact, New Zealand is the only advanced country in the world without any form of depositor protection.
In my view, deposit insurance should be funded by the banking industry out of their billions in profit. The cost would be small, just a fraction of a percentage point per annum on each dollar of bank deposit.
Shouldn’t average Kiwis have the ability to keep some money safe, to have some secure backup in case things really go wrong and banks tip over?
John Kenel, Assured