The (FSB), an international body that monitors and makes recommendations about the global financial system, has published a report this Wednesday which sets out the financial stability implications of and policy measures taken to address them.
According to the international body, COVID-19 represents the biggest test to the financial markets since the global financial crisis (GFC). However, the FSB believes that markets are now more resilient and in a better place to withstand the pandemic as a result of regulatory reforms.
In particular, the report from the FSB sets out five principles which will promote a rapid and coordinated response to support the real economy whilst maintaining financial stability and minimising risk.
According to the report, under the five principles, authorities will:
“The COVID-19 pandemic represents the biggest test of the post-crisis financial system to date. The global financial system faces the dual challenge to sustain the flow of credit amidst declining growth and manage heightened risks,” the FSB said in its statement today.
“Nevertheless, the global financial system is more resilient and better placed to sustain financing to the real economy as a result of the G20 regulatory reforms in the aftermath of the 2008 global financial crisis.”
FSB is closely monitoring market resilience amid COVID-19
In response to COVID-19, the FSB said today that it is closely monitoring the resilience of key nodes in the financial system, which it says are critical for financial stability. This includes financial institutions and markets being able to channel funds to the real economy, market participants being able to access US dollar funding, the ability of financial intermediaries to manage liquidity risk and market participants and financial market infrastructures to manage evolving counterparty risks.
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