If the Reserve Bank's approach is adopted to implementing the Deposit Takers Act that Parliament finally passed into law in July, we're likely to see some of the smaller institutions close their doors while others will be doomed to be less profitable.
Some economists in RBNZ seem to like late 1980s debates, making NZ 30 years late on deposit insurance. The moral hazard argument also seems backward compared to the rest of the world, where big banks/SIFIs are asked to pay more because they present a much larger systemic (aka too big to fail) risk.
Some economists in RBNZ seem to like late 1980s debates, making NZ 30 years late on deposit insurance. The moral hazard argument also seems backward compared to the rest of the world, where big banks/SIFIs are asked to pay more because they present a much larger systemic (aka too big to fail) risk.
Great article Jenny, keep up the great analysis.