The Cypriot crisis has turned a spotlight on the open bank resolution (OBR) policy the Government and Reserve Bank have been working on, even though, as the bank has been quick to point out, the situations are very different.
The policy is intended to deal with a bank failure. The aim is to minimise damage to the insolvent bank's customers and to the wider economy, including taxpayers, by enabling the bank to reopen for business the following day.
It is in principle a separate question from whether bank deposits should be guaranteed, and if so up to what sum and at whose expense. But the issues are entangled by the fact that an OBR would mean depositors could face a haircut - some portion of their funds would be frozen - if the first losses are not enough to cover the shortfall.
The remainder of the depositors' funds, however, would be immediately available and subject to a government guarantee.
The idea is to keep the bank open for business while a long-term solution is sought, which might be purchase by another bank, bailout by the Government, or liquidation.