The Government is to scrap a guarantee extended to the banks for wholesale funding introduced during the credit crunch, following a similar move in Australia.
It says the country's main retail banks are not having any problem raising money offshore and the guarantee will cease at the end of next month.
Since the scheme was set up two years ago the Government guaranteed $10.3 billion of borrowing by the Australian-owned banks and Kiwibank.
The Government collected $290 million in fees from the banks. As at last month banks had used the scheme 24 times.
Finance Minister Bill English says the Government's guarantee to retail deposit customers remains in place.
Mr English says he would consider guaranteeing trading banks' borrowing again if credit markets seized up.