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The week started with the news that the British government had nationalised mortgage bank Bradford & Bingley.
In mainland Europe the governments of Holland, Belgium and Luxembourg were forced to inject €11.2bn into banking group Fortis, the French, Belgian and Luxembourg governments had to pump €6.4bn into local government lender Dexia, while a consortium of German banks injected funds into property lender Hypo Real Estate.
Across the Atlantic the day broke with the news that America's biggest bank Citigroup was acquiring the sixth largest bank, Wachovia, in a rescue deal orchestrated by the Federal Deposit Insurance Corporation and ended with the House of Representatives' rejection of Treasury Secretary Hank Paulson's $700bn bank rescue package.
The House vote caused panic on Wall Street with the Dow shedding a record 777 points.
Meanwhile, at home, the tensions which had been building up within the Irish banking system finally came to the surface with shares in Anglo Irish falling 46pc on the day and the overall index of Irish financial shares losing a quarter of its value.
With the Irish banks finding it impossible to access wholesale funds at almost any price something clearly had to be done if the entire Irish financial system was not to seize up.
As Monday night turned into Tuesday morning a queue of bank bosses, pleading for government help, formed outside the Department of Finance offices on Merrion Street.
As dawn broke on Tuesday Finance Minister Brian Lenihan made the dramatic announcement that the state was unconditionally guaranteeing the deposits and bonds of the Irish-owned banks, exposing the taxpayer to a potential liability of almost €400bn.
The impact on the bank share prices was dramatic. Share prices soared on the back of the news and by the end of the week prices had recovered all of Monday's losses and then some.
Not everyone was best pleased by the announcement. The British government was livid at what it regarded as unfair competition as money flowed out of UK banks and into Irish banks. Prime Minister Gordon Brown was on the phone to complain to his Irish counterpart Brian Cowen.
Also extremely annoyed were the Irish subsidiaries of foreign-owned banks such as Ulster Bank and NIB.
All-night sessions
As the Credit Institutions (Financial Support) Bill was debated in marathon all-night sessions in both the Dail and Seanad, Brian Lenihan announced a partial climbdown when he stated that applications for inclusion in the guarantee scheme would "be considered" from foreign-owned banks with a "significant high street presence" in Ireland.
Just for good measure, EU Competition Commissioner Neelie Kroes sounded distinctly unenthusiastic about the government's deposit guarantee plan, which could spell trouble ahead.
The Dail finally voted to approve the Bill at 2.30 on Thursday morning with the Seanad approving the legislation in time for breakfast. Then it was off to the Phoenix Park where President McAleese signed the act at lunchtime.
At around the same time as our parliamentarians were voting on our bank guarantee scheme, the US Senate was approving the Paulson plan, dramatically increasing the pressure on the House of Representatives to do likewise.
While the Government will have been pleased with its success in passing the guarantee scheme into law it will have been less pleased by the news from Frankfurt where the ECB council once again refused to cut interest rates at its monthly meeting on Thursday.
Unless the monetary hawks on the ECB council can be persuaded to soften their stance the good work done in passing the guarantee scheme could be very quickly undone.
Disappointing
After the disappointing developments in Frankfurt on Thursday, Friday was a day of generally good news. Across the water the UK government strong-armed the Bank of England into announcing a major increase in its lending to British banks.
The move could see the Bank of England lend up to Stg£280bn to the UK high street banks in an effort to ease the liquidity crisis.
Meanwhile, the week ended with the House of Representatives finally passing the Paulson package after an amended bill, suitably larded with pork, was presented to congressmen for their approval.
The vote meant that a week which had begun with the global financial system staring disaster in the face ended on a high note. The crisis is over, at least for now.
Tune in for more developments in this unfolding drama next week.
