Abstract
This joint IMF-World Bank note provides a set of high-level recommendations that can guide national regulatory and supervisory responses to the COVID-19 pandemic and offers an overview of measures taken across jurisdictions to date.
Highlights
This note provides the inputs from the MCMFR team (IMF) and the World Bank staff’s high-level recommendations and guidance on the appropriate regulatory and supervisory responses for the banking sector and offers an overview of measures taken across jurisdictions to date
The International Association of Insurance Supervisors (IAIS) released a statement to describe the steps to address impact of COVID-19 on the insurance sector (March 2020)
Summary
At the same time (contrary to recommendations 3, 4, and 5), several extraordinary measures have been introduced by some authorities through regulatory forbearance These measures include, inter alia, (i) freezing the classification status of all credit exposures prior to COVID-19; (ii) extension on the number of past-due days after which a credit is considered nonperforming; and, in some extreme cases, (iii) allowing banks to postpone adequate provisioning (e.g., roll-forward expected losses) or providing blanket suspension of provisioning requirements for loans covered by moratoria. Credible exit strategies (in particular for moratoria) are critical and need more attention.[7] Further, in supporting prudent restructuring, supervisors have encouraged banks to implement enhanced credit monitoring approaches and imposed specific public disclosure requirements Measures ensure that credit risk continues to be well monitored at both the micro- and macroprudential levels and that market discipline continues to play its critical role
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