The National Party is offering to work with the Government on ways to protect the banking industry during the international financial crisis.

National's leader, John Key, said today it was important to keep politics out the issue and urgent progress was needed on a wholesale bank guarantee scheme.

That means a government guarantee for money loaned to New Zealand banks by foreign banks, a scheme which is being established in Australia and is in placed in other countries.

Finance Minister Michael Cullen said he welcomed National's support for a fundamentally bipartisan approach to finance sector regulation.

He said he held talks with National's finance spokesman, Bill English, last week and would make sure he was kept up to date with developments.

Mr Key said he did not believe a crisis was imminent, and with the right policy responses the banking system could get through the challenges ahead.

"Our banks are fundamentally strong but in the current environment, without a government guarantee it will be very difficult for them to raise funds in offshore finance markets where they will have to compete against banks with cast-iron government backing," he said.

"In this time of uncertainty, wholesale funds will flow to safe havens."

Dr Cullen said earlier today he was working on a wholesale guarantee scheme and indicated it would be brought in before Christmas.

"Clearly we can't leave the New Zealand banking sector exposed to a position where there is a risk that money will all go to other financial systems because they have such guarantees," he said on TV One's Agenda programme a few hours before Mr Key held his press conference.

Mr Key thinks more urgency should be given to developing the wholesale guarantee.

He said he had held discussions with New Zealand's big banks, and knew they wanted assurances.

Mr Key and Dr Cullen both said a wholesale guarantee scheme was complex because New Zealand's banks were largely Australian-owned.

"That seems to me to require some fairly direct understandings to be reached with the Australian government and with the banking regulators in that country," Mr Key said.

"I believe it is important that in any such discussion with the Australian government both major parties must be supportive of the New Zealand position, given the imminent election here."

The retail deposit guarantee has created a contingency liability for the Government of $150 billion, and Mr Key said adding a wholesale guarantee would raise it to $450 billion.

He said he did not foresee the contingency liability being called on, and neither would banks which loaned money to New Zealand banks.

It was needed to ensure confidence in the system and make sure New Zealand banks had continued access to money from foreign banks, he said.