Britain's new Business Minister Peter Mandelson criticised unilateral moves by individual countries to guarantee deposits and said they could hamper efforts to resolve the global financial crisis, the Sunday Telegraph reported.

Mandelson, who served as EU trade commissioner until his appointment to Prime Minister Gordon Brown's cabinet on Friday, told the paper in an interview that moves by governments such as Ireland and Greece to guarantee local bank deposits could lead to market distortions.

"The danger of this crisis is it may spark a new wave of economic nationalism, with each country looking for a 'get out of jail free' card. People have to realise that selective or national approaches could lead markets to look to parts of the financial system in a distorted way," he said.

He said the moves by Ireland and Greece were "likely to create distortions because some parts if the EU system are guaranteed and some are not."

Mandelson said policy options needed to be thought through internationally and implemented collectively.

Ireland annoyed some this week by promising to guarantee all bank deposits, a move that prompted some depositors in Britain to move savings to branches of Irish banks. In other countries, the protection level can be as low as 20,000 euros ($27,720).

In Greece, a senior finance ministry official said on Friday that a Greek pledge to guarantee all deposits was a "political commitment" but not a plan to change legislation that would require financial backing.

In his interview with the Sunday Telegraph, conducted ahead of European crisis talks held on Saturday, Mandelson stopped short of endorsing reported suggestions of a collective EU bank rescue fund of 300 billion euros ($415.7 billion).

At the end of the EU meeting, European leaders vowed to do all they could to fend off the financial mayhem that has snowballed out of Wall Street and is now hitting banks in Europe.

But their final statement was more a declaration of principle and call for coordination of national responses than an announcement of instant new measures to deal with the worst financial crisis since the 1930s. -Reuters