Extensive monetary and fiscal policy measures helped avert turmoil in financial markets and a liquidity crisis in the real economy. These policy measures also shielded the financial system from the corona shock. As a result, the financial system has proven robust – not least thanks to the G20 regulatory reforms implemented after the global financial crisis. Regulation is more flexible and less procyclical.
Higher capital buffers allow the banking system to absorb higher losses and stabilize lending during periods of stress. Yet, there is no doubt that many challenges still lie ahead of us.