Acting Comptroller of the Currency Michael Hsu today told attendees at ABA Risk 2022 that Russia’s invasion of Ukraine could trigger a recession. Hsu warned that multiple possible events stemming from the conflict, including cyber attacks from Russia, broader conflict in Europe and increased inflation could materialize simultaneously increasing the chances of a broad market sell-off.
Americans are already feeling higher gas prices, Hsu said, adding that the expansion of sanctions to oil and gas would put additional upward pressure on fuel prices, and that Ukraine’s role as a producer of wheat, neon, platinum and palladium is also beginning to effect global prices in certain markets.
Despite the increased risks, large banks should be well positioned to withstand a range of shocks, Hsu said, though he cautioned that “nonetheless, greater caution and risk management vigilance is warranted today, perhaps more than any time in recent memory.”
Hsu also warned about the risks of crypto assets to banks and said the OCC is working with U.S. interagency colleagues on “how to maintain a consistent, careful and cautious” approach to bank involvement in crypto.