The Reserve Bank of New Zealand (RBNZ)’s critics have welcomed the government’s plans to give the central bank’s board real governance powers and to introduce retail deposit insurance.

The government has announced that it plans to expand its powers to monitor banks and hold directors and executives accountable for their actions. It also plans to introduce a deposit insurance scheme limit of $50,000 per institution to ensure that a majority of depositors would be fully covered while others would have most of their deposits covered.

Helen Dervan, senior lecturer in law at AUT University, and Simon Jensen, a financial sector regulation lawyer at Buddle Findlay, found the provision for greater powers necessary and long overdue.

“New Zealand’s regulatory philosophy of light-handed supervision with no on-site inspections, no Reserve Bank verification of bank disclosure statements and no depositor protection is out of step with international practice and reform is long overdue,” they said, as reported by NZ Herald.

Read more: Government pushes to expand monitoring of banks

Meanwhile, David Tripe, banking professor at Massey University, commended the government’s move as he has long called for a deposit insurance scheme.

“Information disclosure hasn’t been working very well. It became pretty clear when the GFC was bursting out that we needed deposit insurance and that we needed to have it in advance and not create it on the fly,” he said.

However, he and Jensen were not satisfied with the $50,000 limit.

“Based on proper comparisons (with the UK, Australia, Canada and US) it should be around $150,000 and, as a consequence, it is at serious risk of having to be increased at the worst possible time - when there is a failure or crisis (which is what the UK had to do),” they said.