We could see the introduction of deposit insurance in New Zealand as the government mulls the idea in the next stage of its Reserve Bank Act review.

A joint Treasury and Reserve Bank of New Zealand (RBNZ) group released the outline for the legislative review this week, revealing that deposit insurance and the removal of prudential supervision are among the key issues to be addressed, reports Scoop Business.

New Zealand is currently the only country in the OECD without any kind of protection scheme for depositors.

Consultation papers will be issued in November on five topics – headline legislative objectives, governance, separating prudential supervision from the RBNZ, depositor protection, and the regulatory perimeter of bank regulation, the report said.

Feedback on each of the topics will then be sought during a consultation period taking place between November and January.

“Feedback and recommendations from the first consultation will help inform the government’s preliminary views around any changes to the functions and role of the Reserve Bank,” said team director Bernard Hodgetts in a statement.

“Many of the topics in the terms of reference are interdependent. We believe detailed work on areas like bank regulation and supervision, macro-prudential policy and trans-Tasman cooperation is best undertaken once the objectives, governance and decision-making structures of the bank have been considered,” he said.

Two further rounds of consultation are expected to cover the remaining subject areas including supervision and enforcement, resolution and crisis management, macro-prudential policy, the bank’s own funding and resourcing and detailed options from the first tranche of submissions, it was reported.