13 Oct 2008, Alastair Marsh, Risk magazine
The facility will be restricted to senior unsecured debt instruments with terms of up to five years, and there will be eligibility requirements for ADIs, with non-ADI lenders being excluded on grounds of lack of regulatory oversight.
On Sunday the reserve bank of New Zealand introduced a deposit guarantee scheme covering all retail deposits of participating New Zealand-registered banks, building societies, credit unions and deposit-taking finance companies.
The guarantee will also protect holders of debt securities issued by banks and other financial businesses covered by the guarantee.
In Europe today governments released the details of their planned recapitalisation programs and loan guarantees: the German finance ministry said it planned to issue €100 billion in new debt in order to set up a "financial stabilisation fund"; the French government will guarantee up to €320 billion of short-term debt (with maturities of less than five years) issued by French banks until the end of next year; and the Spanish government promised to guarantee bank debt under five years, up to a maximum of €100 billion by the end of 2008.
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