Financial contagion and known unknowns

The rest of the world’s direct financial exposure to Russia has fallen in recent years and, in aggregate, is now small. This limits the risk of financial contagion from the collapse in Russia’s economy that is underway. If financial contagion does spread to major economies, it is likely to be because losses are concentrated in a systemically important institution. The vulnerabilities are impossible to fully assess in advance of problems emerging but are likely to be greatest in Europe.