The 2012-2013 Cypriot financial crisis should serve as a stark warning to New Zealanders. Following the Greek government debt crisis, the Cyprus bank’s hands were forced to implement the Open Bank Resolution and give a ‘haircut’ of up to 40% on all uninsured deposits over the set De Minimis level of 100,000 Euros. As expected, there was public outrage in Cyprus, but little news of this spread to New Zealand.

As of June 2013, the Reserve Bank of New Zealand now has the OBR in its toolbox ready to use. They define the OBR as a ‘tool for responding to a bank failure’ and have made sure all New Zealand banks are ‘pre-positioned’ for a collapse, meaning the necessary resources such as IT are in place to make the necessary transactions.

Here’s what would happen if a bank faced insolvency tomorrow:
1) The bank(s) would close
2) The bank(s) would be placed under statutory management
3) The bank(s) would spend a couple of days working out what level De Minimis and percentage of a haircut is necessary

4) Apply it immediately, before opening for limited or full-scale business the next day.

On implementation, the first losses are deducted from the bank shareholders, then debt holders, which is followed by deposit holders. All account types (cheque, savings, term deposits) are included, and we could also assume this includes Kiwisaver, depending on the scheme.

There are a number of problems with the Open Bank Resolution, first being that banks have the comfort of knowing that during economic hardship, they can be assured deposit holders will bail them out.  This would be considered a ‘get out of jail free card’ which would therefore encourage reckless financial sector, already well known for risky investments trying to gain higher returns. If the Open Bank Resolution was used, this would cause instability in the rest of the sector resulting in bank runs on all remaining banks. In the event of a banking failure, what will the De Minimis level be (if any) and what percent will the haircut be? We also ask ourselves, why is New Zealand the only country in the OECD that doesn’t have deposit insurance? Are we the world’s guinea pigs for the corporate sector, or have those governing New Zealand not thought it through?

Our banking system, from the ground up was designed to fail. There has never in history been an example of a fiat financial system that has not collapsed. Unfortunately, people have bought into the illusion with everything. Our lives have been lived in dedication to the illusion, and so not only will those at the top of the chain not let it die easily (as they are the only ones who benefit), but nor will the common man – as our ego and identity has been fused together with the illusion. Our only hope for the future is that we reconnect with the true nature of our world, instead of our constructed, artificial reality. All fiat systems crumble. There are no exceptions.

No one predicted the last Global Financial Crisis, and the next will be the same.

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Wake Up NZ is a team of dedicated truth-seekers from all over New Zealand. We are committed to disseminating information that the mainstream media fails to bring to you.

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