“Blimey it must be serious..”

Brian’s hero, and mine, Robert Peston mentioned previously that “the spectacle of governments seemingly at odds with each other and with the Commission is unsettling, to put it mildly.” The New York Times expands on the wider problem

While the European Central Bank has power over interest rates and broader monetary policy, it was never granted parallel oversight of private banks, leaving that task to dozens of regulators across the Continent. This patchwork system includes national central banks in each of the euro-zone’s 15 members and they still retain broad powers within their own borders, further complicating any regional approach to problem-solving.

The European economic landscape today bears little resemblance to the 1990s, when the groundwork for the euro was laid. Back then, Mr. Pisani-Ferry recalled, few banks in Europe had cross-border operations on a significant scale. A wave of mergers over the last decade created giants like HSBC and Deutsche Bank, which straddle continents and have major American exposure.

A point echoed in the Guardian editorial today

One of the great omissions of European economic policymaking is a continental banking regulator. There are global regulators and an array of central banks, but there is nothing in between. As Nicolas Véron of the thinktank Bruegel points out, pan-European banks work to 51 national authorities, nine EU committees and some 80 bilateral arrangements. As financial institutions become increasingly international, this system looks out of date. Any of the big banks going belly-up would stretch the capacity of the host government to stump up the cash.

The extent of the economic interconnectivity is illustrated by the knock-on effect of the liquidity problems of Dublin-based, and German-owned, Depfa. So far, the only concerted effort by EU leaders looks weak, Peston again.

Every European Union leader has signed up to the following statement: “All the leaders of the European Union make clear that each of them will take whatever measures are necessary to maintain the stability of the financial system – whether through liquidity support through central banks, action to deal with individual banks or enhanced depositor protection schemes. While no depositors in our countries’ banks have lost any money, we will continue to take the necessary measures to protect both the system and individual depositors. In taking these measures, European leaders acknowledge the need for close coordination and cooperation.”

So the mayhem of uncoordinated statements and actions over the past few days by the governments of Germany, Denmark, Sweden, Ireland and Greece was simply an accident. They’re all back on the same hymn-sheet today. Investors seem underwhelmed: the FTSE 100 index is tumbling and shares are currently almost 8% lower.