The Crown Retail Deposit Guarantee Scheme was an opt-in

deposit insurance Deposit insurance or deposit protection is a measure implemented in many countries to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due. Deposit insurance systems are one component of ...

scheme, established under the Public Finance Act 1989 in New Zealand during the

Great Recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...

, 2008 to 2011. Dr Michael Cullen, Finance Minister at the time of the scheme's introduction said, "The deposit guarantee is designed to give assurance to New Zealand depositors. The New Zealand banking system remains sound. We want to ensure that ordinary New Zealanders feel that their deposits are safe in the current uncertain international financial market conditions." The scheme guaranteed that the

New Zealand Government , background_color = #012169 , image = New Zealand Government wordmark.svg , image_size=250px , date_established = , country = New Zealand , leader_title = Prime Minister Jacinda Ardern , appointed = Governor-General , main_organ = ...

would repay those who lost money in failed financial institutions. It was implemented on 12 October 2008, administered by

Treasury A treasury is either *A government department related to finance and taxation, a finance ministry. *A place or location where treasure, such as currency or precious items are kept. These can be state or royal property, church treasure or i ...

and the Reserve Bank and at its height resulted in Crown guarantees over $133 billion. Ninety-six institutions were covered by the scheme - 60 non-bank deposit takers, 12

banks A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Becaus ...

and 24

collective investment schemes An investment fund is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group such as reducing the risks of the investment by a significant percentage. These advantages inc ...

. All guarantees had ended by December 2011.

Finance company failures and bailouts

Nine finance companies out of the thirty accepted into the scheme collapsed. This resulted in the Crown bailing out investors, paying $2 billion to more than 42,000 depositors. The three largest bailouts were of South Canterbury Finance Limited, Allied Nationwide Finance Limited, Equitable Mortgages Limited.

References

{{DEFAULTSORT:Crown Retail Deposit Guarantee Scheme Finance in New Zealand Government finances in New Zealand Great Recession Deposit insurance

Finance company failures and bailouts

See also

References