FSB published a report that sets out the financial stability implications of COVID-19 pandemic and the policy measures taken to address the related challenges. The report sets out five principles that underpin the official community’s rapid and coordinated response to support the real economy, maintain financial stability, and minimize the risk of market fragmentation. Based on the principles, the report sets out the ways in which FSB supports international cooperation and coordination on the COVID-19 responses. The report was delivered to G20 Finance Ministers and Central Bank Governors ahead of their virtual meeting on April 15, 2020. Annex 1 of the report contains a table that provides a high-level overview of policy measures taken by the authorities in FSB jurisdictions in response to the COVID-19 outbreak.
The response of official sector community is underpinned by the following principles:
- Authorities will monitor and share information on a timely basis to assess and address financial stability risks from COVID-19, to maximize the benefit of a global policy response.
- Authorities recognize, and will make use of, the flexibility built into existing financial standards—including through the use of firm-specific and macro-prudential buffers—to sustain the supply of financing to the real economy, to support market functioning, and to accommodate robust business continuity planning.
- Authorities will continue to seek opportunities to temporarily reduce operational burdens on firms and authorities, to assist them in focusing on COVID-19 response. This includes, for instance, delaying implementation deadlines, re-prioritizing timetables for initiatives in other policy areas, or providing flexibility in technical compliance rules.
- Authorities’ actions will be consistent with maintaining common international standards and preserving an international level playing field. Such actions will not roll back regulatory reforms or compromise the underlying objectives of existing international standards.
- Authorities will coordinate, through the FSB and other standard-setting bodies, the future timely unwinding of the temporary measures taken, to assist in returning financial conditions and firms’ operations to normal in a smooth and consistent manner and to maintain financial stability in the longer term.
On the basis of these principles, FSB is supporting international cooperation and coordination on the COVID-19 response in three ways. First, FSB is regularly sharing information among financial authorities on evolving financial stability threats on the policy measures that financial authorities are taking, or are considering, and on the effects of those policies. Second, FSB is assessing potential vulnerabilities, in an effort to better understand the impact of COVID-19 on financial markets in individual jurisdictions and across the globe and to inform discussions of policy issues. Third, FSB members are coordinating on their responses to policy issues and this includes the measures that standard-setting bodies and national authorities take to provide flexibility within international standards or reduce operational burdens.
Keywords: International, Banking, Insurance, Securities, COVID-19, Financial Stability, Cross-Border Cooperation, Policy Response, G20, FSB
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.
EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.
HKMA published the seventh and final issue of the Regtech Watch series, which outlines the three-year roadmap of HKMA to integrate supervisory technology, or suptech, into its processes.
EC launched a targeted consultation to improve transparency and efficiency in the secondary markets for nonperforming loans (NPLs).
BIS, Danmarks Nationalbank, Central Bank of Iceland, Norges Bank, and Sveriges Riksbank launched an Innovation Hub in Stockholm, making this the fifth BIS Innovation Hub Center to be opened in the past two years.
FDITECH, the technology lab of FDIC, announced a tech sprint that is designed to explore new technologies and techniques that would help expand the capabilities of community banks to meet the needs of unbanked individuals and households.
EC released the EU Taxonomy Compass, which visually represents the contents of the EU Taxonomy starting with the EU Taxonomy Climate Delegated Act.
FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.
EIOPA published its annual report, which sets out the work done in 2020 and indicates the planned work areas for the coming months.
The ESRB paper that presents an analytical framework that assesses and quantifies the potential impact of a bank failure on the real economy through the lending function.