The banking system of the western world is suffering the equivalent of a cardiac arrest. It is now virtually impossible for any institution to finance itself in the markets longer than overnight. This is a measure of the panic-stricken collapse in confidence that has seized the system. It also demonstrates the challenge that confronted policymakers of the Group of Seven leading high-income countries at their meeting in Washington this weekend.

Did they meet it? At the level of intentions, yes. But, at the level of action, no. Detailed plans of action are required. Otherwise, the world risks a lethal banking collapse.