Chancellor Angela Merkel has announced that Germany will guarantee all private savings accounts, as a major German bank struggles to stay in business.

Ms Merkel had previously been strongly critical of the Irish and Greek governments' decisions to take independent action to protect all savings deposits, but took her decision after an emergency meeting with the central bank and financial regulator.

Hypo Real Estate, Germany's second biggest commercial property lender, is in trouble after a 35bn euro ($48bn; £27.2bn) rescue plan collapsed. The government is under intense pressure to save the bank before markets reopen on Monday.

Britain, Germany, Italy and France all agreed on Saturday to work together to support financial institutions - but stopped short of agreeing US-style bank bail-out plan.

The dynamic duo of Brown and Darling decided instead to go cap in hand to seek a relaxation of the EU rules governing the amount of money individual states can borrow, but the speed at which the EU can react means that by the time any agreement was reached most states would have lost many of their key banks.

As the crisis bites, the EU, its rules and its regulators are no longer in the picture. They are increasingly showing themselves to be impudent and irrelevant. Only the nation states will take care of their own.