Anyone who was becoming inured to the sheer size of the negative numbers in the news should think again. Cross-border bank lending shrank by $4,800bn in the last nine months of 2008. The devastating scale of this repatriation of funds poses two critical challenges to the world’s leaders: they must rescue the most vulnerable countries from immediate funding crises; and stop this implosion from leaving global finance permanently shattered.

A sum of about $4,800bn amounts to a 14 per cent fall in lending, the steepest ever recorded. Non-bank financial flows, such as foreign direct investment, have also slowed abruptly. The aggregate numbers mask an uneven distribution of the damage: unlike capital-rich countries, emerging economies with external deficits – many of them in central and eastern Europe – face sudden stops in external financing to which they have no alternative. The significance is not merely economic, but political.