End in sight for Govt bank guarantee

Last updated 08:31 08/02/2010

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New Zealand is likely to match Australia soon in ending the guarantee behind banks' borrowing of wholesale funds.

The Australian government announced today it would end the guarantee, beginning March 31.

A spokesman for Finance Minister Bill English told NZPA the news from Australia was a welcome sign that financial markets had returned to relative stability.

``From New Zealand's perspective, given the global market improvements and New Zealand's success in raising wholesale funds without using the guarantee, the Government is considering withdrawing the wholesale guarantee facility.

``We will announce any changes as soon as any decisions are made and that could be a matter of weeks,'' the spokesman added.

The facility was established in November 2008 when the liquidity crisis hit the financial markets and it was envisaged then it was a temporary measure.

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- NZPA