This combination means that the actual safety of bank deposits is in practice inseparable from the solvency of an individual government: a government default, as nearly happened with Greece and others a decade ago, would simultaneously bankrupt much of a country’s banking system.

That risk is especially pertinent in Italy, where gross public debt stands at 135 percent of gross domestic product, more than double the EU-recommended ceiling.

To compare, Germany’s stands at a mere 64 percent. Meanwhile, over one-third of the €108 billion in sovereign bonds UniCredit holds are Italian.

ECB president Christine Lagarde reminded the European Parliament on Monday that a European Deposit Insurance Scheme, which was hoped by many to be the means of ending this fateful ‘bank-sovereign’ nexus, has been blocked for years by national governments and remains “desperately missing”.

“I very much hope that within the Eurogroup … that matter can be pursued,” she noted.

In his speech on Tuesday, Nagel again made the point that the combination of a European deposit insurance scheme with banks still highly exposed to their home governments “could lead to a redistribution of sovereign solvency risks.”