Frustrated Greek bank customers wait to get into a branch after a three-week account freeze. The OBR is designed to avoid such lengthy freezes for Kiwis should a bank collapse here.

Banks are the chosen storehouse for a huge portion of the country's wealth.

At the end of December, we had around $150 billion in term deposits and bank accounts. And the value of our homes is heavily dependent on banks' ability to lend to buyers who would be willing to take them off our hands.

Families have a lot staked in banks' financial health.

But the system by which New Zealand hopes to keep its banks safe from failure, and how a bank's collapse would be handled, is little understood.

The Reserve Bank is trying to change that, spurred by banks' criticisms that it isn't doing enough to educate the public.

New Zealand does not have a "zero failure" policy when it comes to banks. Zero failure would mean the Government standing behind the banks, ready to put its hand into the collective taxpayer pocket to ensure no bank ever failed.

Following the Global Financial Crisis, spooked politicians and regulators decided the country needed a mechanism that would provide an explicit alternative to a Government bailing out a failing bank.

As a result, the Open Bank Resolution, or OBR, was born.

The name is jargon, and does little to explain to non-bankers its importance to anyone with an account in a New Zealand bank. Overnight Bank Resuscitation might be a better name.

The OBR is a process the Reserve Bank, which is the regulator of the banks, could use to swoop in and stabilise a bank in crisis.

For it to be used, the Minister of Finance has to order a bank into statutory management, something that would only happen if the Reserve Bank recommended it, very likely because a crisis at the bank had become public sparking a run on deposits, or the fear one would happen.

Once in statutory management, everything would be frozen. No depositor could get at a cent of their money, but the OBR would allow a Reserve Bank team to parachute in and decide how much money was needed to stabilise the bank.

Next day the bank would reopen, but a portion of each account - that amount the RBNZ team through was needed - would be frozen (including children's accounts), with the frozen amounts adding up to enough to save the bank.

To prevent the run on the bank starting again, the remaining money in accounts would be "guaranteed" by the Government.

In a traditional bank liquidation, all accounts would be frozen, possibly for days, possibly for weeks, while the mess is sorted out, or an injection of capital is found. Frozen accounts mean disrupted family lives and damage to the economy.

Toby Fiennes, the Reserve Bank's head of prudential supervision, described the OBR as "a mechanism for reopening a bank very rapidly after a failure event."

He said: "The basic idea is to release transaction accounts to the bank's customers as swiftly as possible so they can carry on making and receiving payments. Instead of their accounts being frozen for a lengthy period as they would under a conventional liquidation, a proportion would be unfrozen and released for the start of the next business day with a government guarantee to prevent further runs on the bank."

But the OBR is also a kind of insurance against the Government of the day feeling pressured into bailing out the failing bank.

It was not a process that had to be followed, but was an option available in the event of a crisis, Reserve Bank spokesman Angus Barclay said.

It is a point Fiennes echoed in a speech in 2013. "OBR would not be the only option in a crisis. A government could still decide to bail out a bank or allow a bank to go into liquidation, if it felt the risks of doing so were small."

New Zealand has a history of banking crises in which taxpayer dollars have been used to avert a crisis. Creating the OBR is a statement that that history may not repeat, and people putting money with banks need to consider they are taking a real risk with their money by depositing it.

Barclay fields calls from the public, so he gets a sample of the misapprehensions . "I do know from personal experience that understanding of it is slowly improving."

But, he added, he does hear a lot of "absolute garbage" about the OBR.

It's not, for example, there to save shareholders. Their capital is the first to go. Unsecured creditors like depositors are next.

Fiennes said: "There are no easy solutions and when a bank goes under, somebody is going to lose money."

Ideologically, the OBR is part of a "three pillar" mixed market and regulatory approach to keeping New Zealand banks secure.

Pillar one is regulation, with the Reserve Bank as the watchdog.

Pillar two is bank "self-discipline", the bank managing itself responsibly.

Pillar three is the market, which provided with good information, keeps the bank in line with the likes of depositors withdrawing funding if a bank starts to do risky things.

Many countries have bank deposit guarantee schemes to protect depositors, but that, the Reserve Bank believes increases "moral hazard", incentivising the market (including depositors) to keep an eye on the banks to keep them honest, but also allowing losses to flow to those who invested their money in search of a return rather than the taxpayer.

BANK CRISES IN NEW ZEALAND

1880s

New Zealand's first banking crisis first manifested itself in Glasgow. The young colony relied on funding from the Old Country, including from the City of Glasgow Bank, but the end of the so-called "Vogel Boom" saw a decline in export prices and land values, and the Scottish bank was done for. In New Zealand the National Bank had to write off shareholder capital, and between 1888 and 1890 BNZ, then holding half of all bank deposits, revealed huge losses. Initially, the Government guaranteed new deposits with the bank, but later injected money into it. In 1895, the Government helped the BNZ take over another distressed bank, the Colonial Bank.

1979-1992

In 1989, the BNZ announced a huge loss, and had to be recapitalised using taxpayer money. It was sold in 1992 to National Australia Bank, which has owned it ever since. In 1979 the Public Service Investment Society was put into statutory management, to emerge again in 1987. It wasn't a bank, but it banked many public servants. In 2011 it became the Cooperative Bank.

2007-2009

The Global Financial Crisis triggered Australia to guarantee bank deposits, so New Zealand had to follow. Losses to the taxpayer were caused by non-bank deposit-takers like South Canterbury Finance, not the banks themselves.