DUBLIN, Ireland—Ireland’s bold decision to guarantee every penny of deposits at Irish-owned banks looks to some like a psychological masterstroke in the banking crisis—an emergency measure that could force countries across Europe and beyond to follow suit.

But European neighbors complained Wednesday that the move has weakened confidence in their more modestly insured banks and encouraged nervous savers to shift money to the new safe haven of Dublin. They called on European Union competition authorities to force an Irish retreat—even as policy-makers in London, Paris and Washington debated hefty hikes to their own countries’ maximum guarantees.

The Irish blank check for deposits and interbank loans amounts, in a doomsday scenario, to a maximum estimated liability of $560 billion—just to repay the debts and deposits of six banks. That’s double the country’s annual gross domestic product, nine times the national debt and $135,000 per citizen. But Ireland’s government leaders have stressed that they made the unprecedented promise only because they calculated that by doing it, shares would rebound, foreign capital would flow in, and they would never have to spend a cent of taxpayer’s money bailing out a bank.