Because economic downturns typically result in even greater uncertainty about asset values, such episodes may trigger an adverse feedback loop whereby financial disruptions cause investment and consumer spending to decline, which, in turn, causes economic activity to contract. Such a contraction then increases uncertainty about the value  4  BIS Review 26/2008  of assets, and, as a result, the financial disruption worsens.
Klaas Knot: Inflation strikes back - drivers and policy reactions Speech by Mr Klaas Knot, President of the Netherlands Bank, at the 25th Annual DNB Research Conference "Inflation strikes back: drivers and policy reactions", Amsterdam, 10 November 2022. *** Welcome everyone! This is a sight for sore eyes: a whole room full of real-life delegates!