The debate about the economic consequences of Russia’s invasion of Ukraine has focused on supply-side concerns such as soaring energy prices and severed supply chains. However, this overlooks the role of the financial sector. Using granular transaction data, this column shows that the outbreak of war acted as a ‘silent monetary tightening’. Exposed banks faced immediate higher funding costs and reduced credit supply, an effect equivalent to a policy rate hike of nearly 60 basis points, well