A plan at last, even if it is only a sketch. Peer Steinbrück, Germany’s finance minister, has drafted a “bad bank” law to cleanse the country’s lenders of an estimated €850bn of toxic assets. Fonder of hectoring other countries about their financial rescue plans than designing his own, Mr Steinbrück has finally unveiled his long-awaited and maiden effort to design a German scheme. Sadly, it does not look as though it will work.

In essence, Mr Steinbrück’s plan seems to involve banks pushing bad loans out and getting cash in to replace them. The idea is that this will stop them hoarding capital as a buffer against future writedowns, and so start lending again. The mechanics of the plan would involve banks transferring toxic assets at 90 per cent of their book value into government-managed vehicles, and then get government bonds of equal value in return. Banks pay an insurance fee for this privilege. They must also compensate the vehicle for any losses suffered on the dodgy assets, as determined by auditors.