The problem remains locating risk free investments and they do not exist except as a government promise. The expanding cash and credit bubble drives the economy and makes it all work well enough. Throw away all those borders and all this disappears immediately.
Local guarantees shift that capital to areas that are capital poor. This is as it should be. A guarantee in North Dakota shifts deposits into their banking system. Their loan portfolio expands locally.
All those private deposits landing in Germany merely come back as local bank deposits simply absolving the individual of local government confiscation. As it should.