The European Union battled to protect people's savings by more than doubling deposit guarantees to at least 50,000 euros ($A95,174.65)in its first joint action against the global financial firestorm.

Desperate to restore confidence in the banking system, European finance ministers also vowed to ride to the rescue of stricken big banks but reserved the right to kick out their failed executives without their 'golden parachutes.'

"Our imperative is to protect depositors and naturally not executives of financial companies, especially those that took excessive risks or bad decisions," French Finance Minister Christine Lagarde said.

"When state interventions are necessary they will be conducted in the taxpayer's interest and they will ensure that executives who cause problems bear the consequences," she said after chairing a meeting in Luxembourg.

In the first concrete joint action to protect the general public against the financial crisis, the ministers agreed to increase minimum bank deposit guarantees to 50,000 euro ($A95,174.65) from 20,000 euro ($A38,069.86) currently.

The agreement fell short of the 100,000 euros($A190,349.29) that had been mooted prior to the meeting, reflecting concerns in poorer Eastern European countries that would have struggled to meet that obligation

"There is a whole series of countries - I would say the majority - which (shared) our preference to set a minimum of 100,000 euros," Spanish Finance Minister Pedro Solbes said.

He said the accord, which is to last initially for one year, was an informal political agreement and that it would be up to each member state to enact it according to national procedures.

The European Commission was tasked with drafting a more formal agreement in the coming weeks which would also reduce the time taken to pay deposit guarantees to days from a matter of months.

Although the accord was less ambitious than expected, it marked the first joint EU-wide action against the crisis after a growing number of countries unilaterally rushed to raise their minimum guarantees on bank deposits in the hope of boosting investor confidence.

After Germany offered a blanket guarantee on bank deposits on Sunday, Austria, Britain, Denmark, France, Portugal, Spain and Sweden indicated they had similar plans in the works.

Ireland triggered the rush last week with it offered an unlimited guarantee on all deposits at its biggest banks.

However, Ireland has come under fire from its EU partners for the move because it covers not only individual savers' deposits but also a wide range of liabilities held by the country's six biggest banks.

The scope of the blanket guarantee irritated other EU countries who fear that it will give Irish banks an unfair advantage over their European rivals, attracting deposits to its lenders from elsewhere in Europe.

Analyst Nicolas Veron at Brussels-based economics think-tank Bruegel warned that increasing deposit guarantees would only have limited benefits.

"Importantly, deposit insurance is good headline material because it relates to ordinary people's experience but it's a bit of a sideshow from a capital markets point of view," Veron said.

"Don't expect decisions on deposit insurance alone to fix the current credit crisis," he said.

Despite a growing sense of urgency to improve oversight of the financial sector, the finance ministers failed to agree a separate long-planned shake-up of how the insurance sector is regulated, an official said.

The reform has floundered on differences over how to organise oversight of the sector and the role of group supervisors and their power over subsidiaries.