Although we are only in the first week of 2010, we are confident that our Statesman of the Year will be Olafur Ragnar Grimsson.

His splendid Viking name alone is enough to make him worthy of consideration, but what really makes the President of Iceland deserving of the honour is how he stands up for the interests of his people against the “international financial community” – an oxymoron if ever there was one.

He has just vetoed a bill that would have obliged Icelandic taxpayers to pay the governments of the United Kingdom and the Netherlands for compensating their own citizens who lost money when private banks based in Iceland collapsed.

There is no merit in the claims of the governments of the United Kingdom and the Netherlands. It was their choice to compensate voters within their jurisdictions for what happened outside their jurisdictions.

Those citizens, in their turn, chose to put their money into the Icelandic banks, motivated by the prospect of higher interest rates – and knowing that the Icelandic government was not guaranteeing their deposits. They thought they were being clever. They were not. They have only themselves to blame. They must accept responsibility for their losses.

One of the lessons of the banking crash may be that governments should develop schemes like the American Federal Deposit Insurance – but that is for the future. To demand it retrospectively of the Icelanders is unjustifiable.

This blog supported the bank bail out of 2008 – very, very reluctantly – not because it was right but because it was necessary. Only the American government was big enough to extend a line of credit that prevented total collapse.

This should not be taken as establishing a general principle that taxpayers are responsible for uninsured deposits.

Now that the immediate crisis is past, the only way to restore the global banking system to long term health is to restore responsibility. That means bankers, depositors, and borrowers must all accept the consequences of their actions, and not expect their mistakes to be added to the national debt of the nearest convenient country.