The agreement designed to ensure tax payers do not have to step in makes clear that shareholders, bond holders and depositors with more than €100,000 euros will bear bank losses and share in any rescue plan for a failed bank.

This now seems likely to become a Europe wide standard and will have implications for the Independent Commission on Banking proposals for splitting UK banks and in turn for any Jersey bank upstreaming to a ring fenced bank.

From a practical perspective it is likely to encourage depositors to focus more on bank risk and diversification in order to spread deposits so as to achieve maximum cover.

In this respect, Jersey has a good story to tell as our Tier 1 capital (the safety buffer) is 48% higher than the new Basel requirements and significantly higher than the UK or EU banking industries.

In the round this should benefit Jersey as depositors focus more on banking stability with the implicit state guarantee withdrawn.

Given the Cyprus experience whether EU countries can completely stand back from supporting a failing bank remains to be tested.