We need a financial system that is able to finance the transition without excessive risk-taking. We need good public policies – based on the best available evidence – to ensure that the transformation does not overwhelm the public and the private sector. Let me explain these points in more detail. I. The global financial system has weathered the storm of the pandemic quite well.
At the onset of the pandemic, in March 2020, there was a short period of significant stress on financial markets – reflecting the global and unexpected nature of the coronavirus shock. The decline in global GDP (gross domestic product) in 2020 happened simultaneously across the globe. This differed from the global financial crisis, which mainly affected advanced economies.