After the disgraceful behaviour of Iceland, will there now be a credit crunch of national banks? The only reason to loan money to Iceland is for geopolitical gain – they are not a good credit risk. In the terms of the industry they are deep sub-prime borrowers trying to mortgage their home. Are there other countries in the same position?
The fact is that only very large or very wealthy countries can afford to guarantee their banks. And of course all countries will look after their own in times of trouble. There is no international rescue plan in place, neither does one seem possible to me. As a UK saver, I do not trust any other country’s bank guarantee.