If there are not enough private funds to fill any capital shortfalls identified, the state in question will be obliged to provide a “backstop”. As a last resort, the government is to recapitalise banks, issue guarantees or take on risks. However, this government support is subject to strict conditions. The bank must be solvent, and the support must not offset any accrued losses.
To the extent that dollars going to domestic oil producers are not fully recycled, the effective demand reduction could be even greater. There could also be important parallel effects in natural gas and other markets. The rise in consumer prices from all these sources, as well as the reduction in aggregate demand, could be noticeable.