A bill extending the retail deposit guarantee scheme covering banks and other financial institutions was passed in Parliament on Wednesday.
The current scheme was due to end in October 2010 but will now run until the end of 2011.
Under the extended portion of the scheme, a maximum of $500,000 in eligible bank deposits per person will be covered, and $250,000 of non-bank deposts.
This is reduced from the current scheme which had a limit of $1 million.
Finance Minister, Bill English, says the guarantees have helped maintain confidence in the country's financial institutions, but also distort the market and impose costs.
He says the extension will help maintain confidence in New Zealand's financial institutions while achieving an orderly exit from the scheme.
The Crown Retail Deposit Guarantee Scheme Bill was passed unanimously.
