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Global regulatory environment: support economic resilience
The actions in the policy regulation area
Review the financial sector regulatory framework to ensure that it can support economic resilience during, and recovery after, the Covid-19 crisis by addressing climate-change, systemic and pandemic risks, improving prudential measures and NPL regulations, and by constructively reviewing non-bank financial sector’s regulation.
The review of the financial sector regulatory framework is fundamental to incentivize long-term financing for specific asset classes to support economic resilience during and after the recovery from the Covid-19.
Policymakers could implement infrastructure supporting factors, based on evidenced risk grounds, to incentivize sustainable infrastructure investing and financing by banks and review regulatory accounting requirements like IFRS9 that can disincentive long term credit.
The pandemic has shown that neither the private sector nor governments alone can effectively tackle global systemic risks. Partnerships between Public and Private sectors are well fit for the purpose of addressing pandemic, climate and other systemic risks, while reducing the economic burden of responses to catastrophes on public budget.