It was therefore never assessed in a stress test – we are unfortunately experiencing it now in real time. If widespread insolvencies occured among borrowers, the banking sector would also be affected. But in many cases, the issue in the first instance is a liquidity bottleneck. That’s something politicians can deal with. The decisive factor is how long the crisis persists.
Moreover, as inflation remained elevated, inflation expectations rose and institutions adapted – for example through cost-ofliving adjustments in labor contracts – thus further escalating the presumed cost of disinflation.