However, while this is an example of an “unknown unknown,” it has only limited potential to prevent us from reaching the end of the tunnel. Ukraine contributes only a quarter of a percent to global economic output. Furthermore, the exposure of European banks to Ukraine is relatively small. According to data from the Bank for International Settlements it stands at about $ billion.
However, we have to see the crisis in Ukraine in relation to Russia, and Russia’s relevance for the world economy is larger by far. And after all, the crisis in Ukraine reminds us that geopolitical tensions do have the power to negatively affect the global economy. But this is something central banks cannot solve.