Markets swooned, prompting a hasty clarification that the Cypriot package was “a specific case with exceptional challenges”. Vulnerable southern countries are furious at the implication that their depositors may be at greater risk than others. Small countries with outsized banking sectors, such as Luxembourg and Malta, were offended by Mr Dijsselbloem’s suggestion that they should hurry to “strengthen your banks, fix your balance sheets”. France even flirted with demanding Mr Dijsselbloem’s resignation. Some German newspapers nicknamed him Dusselbloem, which translates roughly as Dimwitbloem.All this has added to the confusion created by the botched €10 billion ($ 13 billion) rescue of Cyprus. An abortive first bail-out tried to tax all depositors, whether small and insured or large and uninsured. The second deal more sensibly imposed losses on investors and big depositors in the two most troubled banks, and protected all insured depositors. At best, the muddle betrays incoherent and improvised decision-making. At worst, it may show that the euro zone is turning away from its promised “banking union”. The aim, agreed by European leaders at a summit last June, was to “…
