This guarantee will apply if the institution holding their money fails.
The Deposit Takers Bill has been subject to two rounds of public consultation, and applies to institutions accepting people's savings, such as banks, credit unions, building societies and finance companies.
They will all be put under one set of rules.
“The absence of depositor protection has been a long-standing gap in New Zealand’s financial safety net,” said the Finance Minister Grant Robertson.
“This legislation closes that gap and brings New Zealand in line with international practices.
“It provides economic security for eligible New Zealanders …. while helping protect the country’s financial system and wider economy.”
The scheme originally proposed a $50,000 guarantee, but submissions argued that was not enough.
The scheme will be pre-funded by levies on deposit takers and will be supported by a Crown backstop.
Robertson said the required size of the fund to pay for this scheme was still being worked out. But international experience suggested a fund would be needed that was between 0.3 % and 5% of the covered deposits.
Robertson said the scheme would be risk-variable, so that people with riskier deposits would pay more than people taking a safer option.
The Reserve Bank will have a supervisory role in this scheme.
Robertson said all OECD countries already had a scheme like this except Israel and New Zealand.
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