Navigating systemic risks: Ukraine, climate and crypto
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THE effects of potential crises and dislocations on the global financial system and on systemic risk, in particular, can’t all be forecast in advance. The best we can do is prepare for a range of systemic risks and ensure that markets have the right infrastructure and regulatory frameworks in place to weather the storms.
In the case of the war in Ukraine and other geopolitical conflicts, that means understanding the consequences of sanctions, embargos and potential tariffs, and countering the spillover effects on energy, food and other commodities markets.
For financial institutions, that means enough liquidity to withstand unanticipated shocks. For “stablecoins”, cryptoassets and other newer markets, it means having the regulatory oversight, authority and mechanisms in place to protect investors.
