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WELLINGTON: New Zealand will next month close a wholesale funding guarantee introduced at the height of the global financial crisis, Finance Minister Bill English said Wednesday.
The guarantee, to be scrapped at the end of April, was introduced in November 2008 to offer a guarantee on funds raised by New Zealand banks in global markets.
"It helped our banks access funding during that crisis, but international market conditions have improved - and continue to improve in 2010," English told the New Zealand Australia Investment Forum in Auckland.
"New Zealand banks are now raising funds without using the guarantee, which was always envisaged as a temporary measure for extraordinary times."
Australia said last month it would be ending its wholesale funding guarantee on March 31.
Since the guarantee scheme was set up in New Zealand, 24 guarantees have been issued, covering NZ$10.3 billion (US$7.24 billion) of borrowing by banks.
The scheme has made no payouts on defaults and the government said it would receive almost NZ$290 million in fees from the banks.
At the time of the crisis, the government also introduced a guarantee on retail deposits in banks and finance companies to prevent any run on funds by depositors. Last year the government said the retail guarantee would be extended to the end of 2011.
- AFP/yb
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