Throughout his six months in charge of the European Union Nicolas Sarkozy, French president, tried hard to carve out a role for Europe in responding to the financial crises that engulf the world – with some success. Commentators have given him a gold star for effort or, as the French would have it, a mention très bien. But he has left a tricky problem in the uncertain hands of his Czech successors: the future of the single financial market. Will Europe continue to integrate, and move towards the promised land of a continent-wide market? Or has the crisis blown the EU so far off course that the process of integration will go into reverse?

At this point, a member of that tiny band of anoraks who fully understand the complexities of the single market – one of the Schleswig-Holstein questions of our time – may pipe up and say the problem lies in the European Economic Area, not the eurozone or the EU. For once she would be right, as it is the difficulties of the Icelandic banks that have revealed the fly in the ointment. In the EEA, a bank authorised in one country is authorised in all of them. Landsbanki was not supervised by the Financial Services Authority, yet could take deposits from UK retail customers. When Iceland began to melt down, so to speak, it became clear that the backing of the Icelandic central bank was insubstantial. The Icelandic banks had been allowed to grow too big for their authorities to save.