The third leg of European banking union, the common deposit insurance scheme, has been postponed until an unspecified reduction in bank risk has been achieved. A reduction in banks’ domestic sovereign exposure has (mostly rightly) been identified as an objective, potentially via risk-weighting sovereigns. However, risk-weighting sovereigns is the wrong way to go because it both undermines the most fundamental concepts of government and governance (trust), and would build a strongly pro-cyclical element into policy making. There are simpler and better ways to achieve standardised limits on banks’ exposure to sovereigns. […]