Mike Shedlock

Reader "MB" who lives in New Zealand is concerned about confiscation of deposits. He writes ...

Hi Mish

Apparently articles are appearing in a NZ newspaper editorials saying that the NZ government has the same policy of confiscation as that being used on Cyprus by the EU. In the event of a banking crisis, the government will be able to take deposit funds to bail out a bank.

MB

Theft?

A letter to the Reserve Bank of New Zealand states Reserve Bank policy looks like theft.

As a super-annuitant who depends on interest from term deposits to top up my pension, I'm horrified to learn that the Reserve Bank will put in place a process by which ordinary bank depositors will, without notification and without their consent, have their savings used to bail out a bank in financial distress.

If a banking crisis arises, banks will be able to freeze bank accounts overnight and reopen them the next day, but the account will have been "shaved".

Those of us who suffered loss of retirement savings in the finance institutions' crashes in 2008 thought we'd be safe keeping the remainder in our banks, especially the Kiwi-owned bank.

What a shock to learn that our money isn't safe after all.

This is a terrifying prospect for those of us who have no way to replace any losses because our days of being able to earn are long behind us.

Jill

Open Bank Resolution (OBR) Policy

To understand what Jill and others are concerned about, let's go straight to the source, the Reserve Bank of New Zealand's Open Bank Resolution (OBR) Policy

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.
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