Having rescued its own banks from possible collapse, the UK is now bailing out some of the British depositors caught by the implosion of Iceland’s banking system. Local authorities look like being the biggest losers, with £799m of investments in Icelandic banks known to be at risk. Reykjavik’s decision to default on the compensation it owes to foreign investors shows that, despite assurances by national governments, there is no such thing as a cast-iron guarantee.

Iceland’s failure to honour its obligations to overseas depositors is an extraordinary event. But, as long as the global financial crisis has further to run, there is no reason to think it will be unique.