Short selling takes place when the price of a share is falling. Speculators “borrow” shares in the company, which they then sell, in the hope that the price will continue to fall, allowing the speculator to buy them back at a profit and repay the “loan”. The practice is thought to date back to 1609. The most famous example is when Hungarian-American financier George Soros sold more than £6 billion short in 1992, provoking a government crisis and forcing the pound to leave the European Exchange Rate Mechanism.

The shares in Société Générale lost more than 20% of their value at one point last week, after UK tabloid The Mail on Sunday published an article based on what it thought was a report in Le Monde saying the company was on the verge of bankruptcy as a result of the amount of Greek debt the bank, the second-largest in France, is carrying. In fact, the source was a work of fiction that has been running in the French paper as a series during the summer. Société Générale’s does, however, hold a huge amount of Greek debt, and its position is indeed fragile.

The Mail on Sunday apologised for the mistake, but speculators had already begun short selling Société Générale shares, convinced their value would go down even further. The bank’s shares dropped by 20%, to recover only 14% down, their lowest level for two-and-ahalf years. Some short sellers will almost certainly have suffered losses. France and Spain introduced their ban for 15 days, but the Belgian ban is indefinite. Other countries, including Germany, could follow.

• Meanwhile on the Brussels stock market, the decline in the price of shares in Dexia has had consequences for some of its major shareholders – the Brussels region and about half of the capital’s municipal authorities. They are historically large shareholders in Dexia, formerly Gemeentekrediet, and increased their equity when they bailed the bank out during the financial crisis of 2008. To do so, they borrowed money on which they are now paying higher interest, at the same time as the dividend on their Dexia shares dwindles away. According to Herman Matthijs, professor of public finance at the Brussels Free University (VUB), it could be 2025 or 2030 before the situation rights itself.