We should do our best to reduce risks arising out of losses of failing banks and protect the interests of all concerned, Finance Minister Bill English said.
He said that the public consultation initiated by the Reserve Bank of New Zealand (RBNZ) on new tools to create financial stability was an important process extending a significant opportunity to gather public opinion.
“This is an important mechanism, which will reduce the likelihood of taxpayers having to bail out a failing bank,” he said, speaking at the ‘Finance 2013’ organised by Massey University at its Albany Campus on February 27.
The conference, fourth in an annual series, was organised by the University in partnership with the Auckland Chamber of Commerce.
“We should do as much as we can to reduce these risks to taxpayers, and hand more of the costs and incentives back to the financial system.
“Banks and other lenders will then take more care if they face all the consequences of their decisions,” Mr English said.
‘Open Bank Resolution’ is an RBNZ initiative that aims to quickly spread the losses of a failing bank across shareholders and creditors.
Vice-Chancellor Steve Maharey said that Auckland businesses and the University played an important role in generating economic growth for New Zealand.
“Increasingly, Massey is engaging in conversations with business groups, local and central government and communities to find solutions to social and economic challenges, he said.
Mr English acknowledged the efforts made by the University and the Chamber to build closer relationships between businesspeople and academics.
“We are a country in which there is not enough interchange between business, academia and politics. Massey has made an outstanding effort with this event and in other high profile ways of connecting with its communities,” he said.
Outlining his government’s plan to improve economic growth, Mr English said that investments in roads, rail, ultra-fast broadband, 14,000 new apprenticeships and the Christchurch rebuild were being addressed on priority.
He said that his government was keen to sell minority shareholdings in state-owned energy companies and Air New Zealand.
A Supreme Court decision on February 27, dismissing a petition on Maori water rights cleared the way for the government to implement its plan.
Answering a question by Associate Professor David Tripe of Massey University’s Centre for Financial Services and Markets on the possible impact of OBR on small depositors, Mr English said, “Other countries are considering some sort of protection for bank creditors, including depositor insurance and depositor preference so that depositors get paid out in advance of other bank creditors,” Dr Tripe said.
Ted van Arkel, a member on the board of the Auckland Chamber of Commerce announced cash awards ($1000) for the top finance and economics first-year students studying at the Albany Campus this academic year.