Deposit insurance and the like are a giant statement of faith in your fellow man

From Europe Is Full of Unique, Bad Situations by Megan McArdle.

In her post, she incidentally makes a point that I think is quite central. Effective institutions are necessary for any national economy but they can only be as good as the motivating value system (culture) behind them. The European Union has created the pan-continental institutions without creating a European culture with shared values and weltanchauung.

What they could to is create truly multinational institutions for things like deposit insurance, bond guarantees, and bank regulation, but there's no national will to do this among the solvent countries--and it's hard to blame them. Deposit insurance and the like are a giant statement of faith in your fellow man. And when those men do not share a culture or a set of political and economic institutions, it's hard to generate that sort of faith.

Where there are transfers of resources from one group to another, there needs to be enough cultural commonality between them for both to believe that this is the right and effecive thing to do.