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.
But the following question needs to be constantly asked: “Financial innovation towards what objective?” As long as financial innovation is seen to promote price discovery, greater intermediation efficiency, and hence, overall efficiency and growth, it must be encouraged, but with appropriate safeguards to maintain financial stability. Unproductive financial innovation, however, will need to be discouraged.