The Government plans to introduce a deposit insurance scheme to ensure New Zealanders' savings are safe in case banks collapse.
Finance Minister Grant Robertson make the announcement today.
The Government's second phase of the review of the Reserve Bank Act included the introduction of deposit insurance of $50,000 per institution.
Last June, Cabinet signed off an "in-principle decision" to create a deposit protection regime, proposing a limit of between $30,000 and $50,000.
It came after the OECD and International Monetary Fund indicated New Zealand's banking system "might be more vulnerable in a crisis because we don’t have a deposit protection regime".
Today's sign off means more than 90 per cent of depositors could be covered.
The review also saw the Government propose greater powers to monitor banks to hold directors and executives "more accountable" for their actions.
The changes also include a governance board to oversee financial stability matters, and giving more oversight to the Auditor-General and the Ombudsman to increase transparency of the Reserve Bank.
Mr Robertson said New Zealand's bank laws are 30-years-old.
"It’s important that Kiwis have confidence in the people running our banks and know the consequences they’ll face," Mr Robertson said.
"We’ve seen examples of how confidence was shaken overseas and we’re acting to make sure New Zealand has a world-leading accountability regime."
The laws will be split into two acts, with the Institutional Act set to be introduced in mid-2020, and the deposit insurance scheme policy decisions made by mid-2020.
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