ECB Vice President Luis de Guindos said in a speech, “for the euro area, the financial stability impact of the war has so far been relatively contained.” And, “markets have generally been functioning well”, with “no dash for cash”.

“While both banks and non-banks have been affected – especially the few that have large direct exposures to Russia and Ukraine – the economic fallout has not had a sizeable impact on the EU banking or financial systems as a whole,” he added.

But he also noted, “the invasion of Ukraine also demonstrated how vulnerable Europe is due to its high dependency on fossil fuel imports from Russia. Speeding up the green transition is a key priority from this perspective too – not only to address the urgent environmental and climate challenges we face, but also to help increase our energy security and protect the EU economy from energy price spikes.”

Full speech here.

ECB Chief Economist Philip Lane said in an interview with Antenna TV, there are three concerns about the Russian invasion of Ukraine, from view point of the economy, including energy, trade and uncertainty. “The war is a major negative economic issue, but the reopening of the economy gives some momentum. So this year, for example, we should expect the tourist season to be better than last year,” he said.

Lane expected that inflation might peak by “mid-year” but that depends on the war. “Most likely, with the nature of the energy shock, prices will either level off at these high prices or will start to decline”, he added. “But the momentum of inflation will slow down, so we do think that in the second half to the year, as you say, the inflation rate will come down.”

He also emphasized, “unlike the 1970s, these are a few months of high inflation rates. It is not a decade of high inflation rates, and we do think the inflation will fall later this year. So please remember: this inflation is coming from outside, it is not coming from the European economy. This is why we do think it has this special characteristic.”

Full interview here.

ECB Governing Council member Bostjan Vasle said the most important thing for him is to start the process of ending asset purchases “note very late in the year”, and “have the opportunity to be out of negative territory by the turn of the year.”

“We’re still expecting quite strong positive growth rates, and if that scenario materializes I don’t see any reasons why we wouldn’t continue with policy normalization after the turn of the year and go above zero with interest rates,” he said.

That’s “one element affecting my understanding of not only inflation, but especially inflation pressures which are in the pipeline at the moment,” Vasle said. “It also gives me additional insight into what’s happening in the labor market and how these expectations regarding wages will be formed in future months and quarters.”

“My expectation is that in a quarter or two we’ll see the peak of inflation and then a gradual easing by the end of the year,” he said. “The last inflation reading was indeed very high, but in the context of the conflict and the rising prices across various energy segments, it was something which wasn’t so unexpected.”