It has been demonstrated that liberal and unsubstantiated valuation assumptions can result in material inaccuracies in financial statements and substantial write-downs of structured products, and in case of excessive concentration, even demise of the sponsoring institution. Supervisors and banks, therefore, need to understand the potentially significant effect that market volatility on the financials of a bank.
Learning the lessons of the last decade, there has been a renewed consensus that the composition of policies matters for overcoming the crisis. More than ever before, macroeconomic, supervisory and regulatory authorities have dovetailed and made each other’s efforts more powerful. Policy responses to the pandemic What has this meant for monetary policy?