Europe must rearm militarily to avoid having to wage war. While the former is expensive, it is still cheaper than the latter.

However, Europe must, above all, significantly increase its resilience in energy supply to avoid stumbling from one energy price shock to the next. The former is (or will be) expensive, but not as expensive as the latter. This should also be the maxim of Europe’s political elite in light of current and future tectonic shifts in the global economy and world politics.

Foto: Maria Hahn-Wohlmuth

While politics shows at least serious, goal-oriented intentions regarding Europe’s military rearmament, there is a loud silence regarding the question of strengthening energy resilience. Although measures were taken in the EU after the 2022 gas crisis that clearly placed the energy supply on a broader and thus somewhat more secure basis (building reserves, diversification), measures for strategic-institutional rearmament are entirely lacking. These should aim to significantly weaken, if not neutralize, the impact of energy price shocks. Meanwhile, public discourse is dominated by skirmishes over marginal phenomena like the merit-order effect, which have little to nothing to do with the 2022 gas crisis and certainly nothing to do with the current energy price shock.

Both recent crises had been provoked by a very similar mix of circumstances:

• Physical Shortage: Sudden physical scarcity of gas and oil on spot markets (threatened reduction of gas deliveries to Europe by Russia in 2022; oil shortage due to the USA/Israel-Iran war in 2026).

• Market Panic: This is paired with speculation-driven panic on spot markets, partly due to the primacy of supply security.

In both cases, these factors led to rapid and extreme price increases, which hit the derivative markets (gas, electricity, or gasoline, diesel) just as quickly and extremely.

Furthermore, and more importantly, energy crises have much in common with financial crises; they simply manifest in opposite inferior price developments: asset price collapse and liquidity shortages in financial crises, versus oil, gas, and electricity price hikes and energy shortages in energy crises.

Energy Market Supervision Modeled on Financial Supervision

Over the last few decades, the financial sector has undergone significant institutional rearmament, at least in industrialized nations. While this has not always made financial crises impossible (e.g., the 2008 financial crisis), it has allowed their negative impacts to be greatly mitigated.

The decisive, stability-ensuring institutions in the financial sector are independent financial market and banking supervisors, as well as independent central banks. They were installed by policymakers over the last 40 years in close cooperation with the scientific community and sharpened when necessary. The former are statutorily responsible for financial market and banking stability, while the latter are responsible for price stability (inflation targets) and liquidity provision (Lender of Last Resort).

Europe urgently needs similar institutions to secure its energy supply in case of crisis and to ensure the stability of its energy markets. Consequently, energy market supervision must be equipped with similar control and steering instruments as financial market and banking supervision.

The ECB as „Supplier of Last Resort“

Above all, an energy policy counterpart to the central bank is needed regarding its function as a „Lender of Last Resort“. Since energy prices strongly affect the general price level, it is logical to task central banks—in Europe, the ECB—with securing energy supply and prices during times of crisis.

To achieve this, the ECB would have to hold a (large) portion of its assets (foreign exchange reserves, gold reserves) in the form of „energy reserves“ (in stationary and mobile oil and gas deposits). This would allow it to successfully counteract inferior energy price increases resulting from crisis-related or speculative shortages through adequate and rapid supply expansion (Keyword: Supplier of Last Resort).

Just as with foreign exchange interventions, the ECB needs sufficient and rapidly marketable energy reserves to credibly fulfill its stability mandate. To this end:

• Existing energy reserve stores in individual EU countries should be transferred to the ECB.

• These should be managed independently by the ECB and, above all, sufficiently expanded.

This is the expensive and technically demanding part of energy-policy-institutional rearmament. However, the mere existence of a potentially powerful, independent institution often proves to be sufficient to prevent massive developments in sensitive markets.

About the Author: Franz R. Hahn is an economist and was a banking and finance expert at the Austrian Institute of Economic Research (WIFO) in Vienna until 2017. This article was published in German on March 23, 2026, in the daily newspaper ‚Neue Zürcher Zeitung‘.