But that has little to do with the demand you are referring to. I find that too sweeping; it ignores the risks inherent in a capital calculation that is geared to the balance sheet total rather than to the bank’s risk. Investors want to see returns and, unfortunately, often take a very short-term view.
A Surge in Geopolitical Risk Another challenge facing central banks is the surge in geopolitical risk triggered by the Russian invasion of Ukraine. This has induced a further increase in commodity prices. And it has increased inflation worldwide. In addition, uncertainties over geopolitical risk are extremely high. These uncertainties could put downward pressure on the global economy by shrinking trade and damaging confidence.