EU leaders went to Paris at the weekend and vowed solemnly to co-operate in their handling of the credit crisis. By Monday all bets were off as different countries either broke ranks or strained at the leash in their desire to protect their own private savers first by offering blanket guarantees.

That spectacle has raised all manner of questions — should there be a continental banking regulator for example, to fill the gap between the various central banks and the global regulators like the IMF? 

For Britain it raises the immediate question of whether the government should move to stop any seepage of funds abroad by guaranteeing all savers’ deposits. At the moment deposits are guaranteed up to 50,000 pounds.

But the issue of guaranteeing savers’ deposits runs alongside the wider question for Chancellor Alistair Darling of whether Britain should bail out its banks in a blanket operation rather than just acting on a case-by-case basis — effectively buying a stake in the strugglers in a part-nationalisation.

The subject is on the agenda for Monday’s meeting of the crisis National Economic Council.

Bank of England governor Mervyn King has warned of the “moral hazard” in saving banks from their own lack of prudence but the alternative is to let them go to the wall and risk a banking crisis infecting the entire economy and, with it, the lives of ordinary people.

What do you think? Does Britain need a massive U.S.-style banking sector bailout?