gases, fertilisers and food products, in particular grain, have become, at least in the meantime, notably more expensive. furthermore, the war and the related sanctions are again distorting various supply chains, as both russia and ukraine produce a number of goods needed in the retail trade and at upstream stages of production. in february already, disruptions to ukrainian supplies of cable harnesses for motor vehicles led to production stoppages at many car plants in germany, including volkswagen ’ s factory in wolfsburg. another critical good is neon gas. before the war, ukraine was producing more than half of the global supply of this noble gas, which is a key ingredient for making microchips. shortly after the start of military hostilities, production came to a halt. in particular, ingas, one of ukraine ’ s two neon producers, is located in the city of mariupol, which has been occupied and heavily destroyed by russian troops. this production stoppage might impose significant constraints on the worldwide output of microchips. 2 additional distortions of supply chains are being caused by airspace closures, blocked seaports, shipping avoiding the black sea, and a lack of truck drivers. all these factors are adding to the upward pressure on inflation that already existed due to pandemic effects. however, the russian aggression could also affect price dynamics through a change in economic activity. before the war, our experts had been expecting to see a notable economic recovery in spring. the russian aggression, however, clouded the economic outlook in germany. as the war continues, there is a significant risk of a further escalation, which would entail larger direct and indirect effects on inflation. tougher economic sanctions, e. g. including a complete embargo of russian energy exports to europe, have become increasingly likely. these would cause another spike in energy commodity prices and weigh on the economic outlook, at least in the short term. the bundesbank recently published a model - based scenario analysis estimating the effects of an immediate stoppage of energy imports from russia on the german economy. in this scenario, the german economy might even slide into recession, with real output contracting by up to 2 % in 2022. 3 this could exert a degree of disinflationary pressure. nevertheless, on balance, the inflationary factors of sanctions such as an energy embargo would clearly prevail, at least in the short term. 2 / 7 bis central bankers'speeches it

conduct an additional new issue – all on the private market and without government guarantees. in many countries, where the banking systems have been affected by the current crisis to a greater extent, this has been impossible. in addition, all four major banks have strengthened their capital by reducing or cancelling dividends to shareholders for the previous year. it should be pointed out, however, that the danger has not yet passed. if the situation deteriorates more than expected, credit ratings may come under pressure and the banks may experience funding difficulties once again. the riksbank's measures safeguard financial stability since the financial crisis broke out, the riksbank has entered into swap agreements with two of the baltic states. we have made it possible for the estonian central bank to swap estonian kronor for swedish kronor should the need arise, and for the latvian central bank to borrow euros direct from the riksbank. the aim of these agreements is to make it easier for the central banks in estonia and latvia to safeguard financial stability in the respective countries. entering into these swap agreements also serves to safeguard financial stability in sweden. in order to secure the supply of liquidity, the riksbank has also lent kronor and dollars to the swedish banks when they have not been able to acquire funding on the market. these loans have been provided at longer maturities than normal and with a broader spectrum of collateral. in europe and other parts of the world, central banks and supervisory authorities have faced many new problems over the last 12 months, not least with regard to banks that have operations in several countries. the experience gained is now the subject of intensive discussion. i am convinced that in the future we will see major changes regarding the supervision and regulation of the banks and other financial operations. but i will gladly speak about this on another occasion. concluding remarks over the last 12 months we have experienced a financial crisis that is exceptional in many respects in the sense that it has hit more players, markets and types of asset than any previous crisis. since the beginning of the summer, the real economy has begun to show signs of stabilisation, although from very low levels. in asia, and not least in china and india, growth has begun to pick up again and this is having a noticeable effect at those companies that export to these countries. world trade is beginning to stabilise and the fall in gdp has slowed down. the reports of the banks and companies for the second quarter have also been less negative than