RBNZ says there's a moral hazard risk with deposit guarantee

You're right. There is a moral hazard when you provide a blanket guarantee,” Orr said in answer to a question.

That's one of the reasons why New Zealand “has been one of the last countries on this earth” to institute such a guarantee.

The scheme is currently scheduled to take effect from mid-2025 and the RBNZ is still consulting on how it will apply proportionality and what standards institutions will need to meet.

But the ability of new, higher-risk institutions coming into NZ and winning deposits “is extremely low” because they and the existing non-bank institutions in the country will have to comply with the new prudential requirements RBNZ is imposing.