industries with limited alternatives that policy interventions to increase resilience can be justified. the european union has devised its open strategic autonomy framework for precisely this purpose. it can pinpoint fragilities and allow for targeted support. yet there is some obvious friction between the " open " and the " autonomy " parts of this strategy. striking the right balance between these two aspects will inevitably spark debate, and possibly even disagreement. on the one hand, there is still much to be done in terms of making supply chains resilient. a recent bundesbank survey among german firms highlights the limited scope for reducing critical inputs from china. almost half of manufacturers report that their production hinges on intermediate products from china. eighty percent of them claim it would be at least difficult to replace these inputs. 7 on the other hand, we should remind ourselves of the undisputable benefits of globalisation. retreating from established trade patterns on a broad scale comes at a huge cost, as brexit showed, much to everyone's great discomfort. i won't dwell on its consequences. but that episode does illustrate that withdrawing from international cooperation comes with a substantial price tag and should thus be considered with the greatest care. 4 / 6 bis - central bankers'speeches in some cases, this price tag may be justified by other, more pressing objectives : for example, there cannot be normal trade with countries that flagrantly violate the international order by waging wars of aggression or fostering terrorism. as elected representatives, politicians may decide to restrict trade for the greater good. but these cases are exceptions that prove the rule. normally, there is good reason to continue maintaining an open, rules - based trading system. this also requires the world trade organization to be able to adapt its rulebook to new problems. nowadays, this commitment to an open and rules - based system seems to have slipped down the agenda for many governments. i hope it has become clear that i consider this open, rules - based system to be very important. 6 relevance for monetary policy now you may be asking yourselves : does all this matter for central banks? and what role can monetary policy play here? to the first question, i would say yes, this all matters a great deal for central banks. from a theoretical perspective, there are a number of reasons why the international division of labour could dampen inflation : for example through cheaper imports, greater competition, or lower input costs. the empirical evidence, however, is rather ambiguous. what we have

##liant the country was on russian energy imports was a kind of wake - up call. an extreme case is a situation where virtually all imports are concentrated on a single supplier. for example, china is estimated to control 90 % of the rare earths refining capacity. 4 i did not pick china as an example by chance. china is considered the most critical choke point in global value chains across a broad range of industries, both as a dominant supplier and as a dominant buyer. 5 how to address supply chain resilience 3 / 6 bis - central bankers'speeches if we want to carry on reaping the benefits of international trade, this is an issue we need to address. that won't be easy. for one thing, we have to distinguish between short - term interruptions and permanent dependencies. while disruptions caused by the pandemic were painful, it was precisely because of those global value chains that firms were able to adjust to the big shifts in demand experienced afterwards. bundesbank researchers found that the deeply interlocked value chains helped a great deal in rapidly adjusting to these new demands. 5 think of it equipment required for remote work. but also test kits, face masks and other personal protective equipment were needed all of a sudden. that in turn supported the recovery. as a by - product of the troubles experienced, firms have now updated their risk assessments. they have started reconfiguring their production networks to scale back their reliance on certain suppliers. that is a complicated task, and in many cases, " more robust " may also mean " more expensive ". 6 but it is essentially this market - driven approach that will ensure greater resilience. it allows a delicate balance to be struck. supply chains will be diversified and realigned where necessary. at the same time, market forces will prevent firms from becoming too isolated. there are limits to this line of action, unfortunately. commodity and energy imports may be hard to diversify, quite simply because these natural resources are far from evenly spread across the globe. some other critical industries producing intermediate inputs are highly concentrated as well. in these cases, the transitional costs of reconfiguring supply chains may be extremely high. consider the semiconductor industry, where setting up a single new production line may be a multi - billion euro endeavour. at the same time, being excessively reliant on a single source country is often problematic from a geopolitical point of view. it is for these strategic