Despite these improvements, however, threats to financial stability are emerging from elevated political and policy uncertainty around the globe. Global Financial Stability Report, October 2020 : Bridge to Recovery. Description: the probability distribution of future GDP growth and applies it to a set of 20 Inclusive growth and issues arising from it. Page: 1 of 4 2020 global hunger index. Description: Crypto assets have features that may improve market efficiency, but they could also pose risks if used with leverage or without appropriate safeguards. continues to strengthen in response to extraordinary policy support, regulatory The report attempts to provide a comprehensive assessment of these vulnerabilities while focusing specifically on corporate sector debt in advanced economies, the sovereign–financial sector nexus in the euro area, China’s financial imbalances, volatile portfolio flows to emerging markets, and downside risks to the housing market. The April 2018 Global Financial Stability Report (GFSR) finds that short-term risks to financial stability have increased somewhat since the previous GFSR. According to data from the National Securities Depository Ltd. (NSDL), the year 2019 saw foreign portfolio investors (FPIs) investing heavily in Indian equities with total inflows breaching the ₹1 lakh-crore mark only for the fourth time ever and the first since 2013. It reviews the main precrisis failings in financial sector oversight and assesses the progress in implementation of the reform agenda designed to address these failings. stronger because of improved capital and liquidity buffers, amid tighter Indian Economy and issues relating to planning, mobilization of resources, growth, development, and employment. The state-run banks’ GNPA ratios may increase to 13.2% by September 2020 from 12.7% in September 2019. This may lead The World Bank releases the South Asia Economic Focus report and Poverty and Shared Prosperity Report. The report attempts to provide a comprehensive assessment of these vulnerabilities while focusing specifically on corporate sector debt in advanced economies, the sovereign–financial sector nexus in the euro area, China’s financial imbalances, volatile portfolio flows to emerging markets, and downside risks to the housing market. However, some banks are still FSB FINANCIAL STABILITY BOARD Global Monitoring Report on Non-Bank Financial Intermediation 2019. The Report draws out the financial ramifications of economic imbalances highlighted by the IMF's World Economic Outlook. World Economic Outlook, October 2020: A Long and Difficult Ascent, Global Financial Stability Report: Bridge to Recovery, Fiscal Monitor: Policies for the Recovery. been uneven. The solvency of many life insurance companies and pension funds is threatened by a prolonged period of low interest rates. Getting the policy mix right is crucial. Nov 25,2020 - ‘Global Financial Stability Report’ is prepared by thea)European Central Bankb)International Monetary Fundc)International Bank for Reconstruction and Developmentd)Organization for Economic Cooperation and DevelopmentCorrect answer is option 'B'. Following the COVID-19 outbreak, the prices of risk assets collapsed and market volatility spiked, while expectations of widespread defaults led to a surge in borrowing costs. An intensification of concerns about emerging markets, a broader rise in trade tensions, the realization of political and policy uncertainty, or a faster-than-expected tightening in monetary normalization could all lead to a sharp tightening in financial conditions. Combined with low credit demand, this would lower bank earnings, particularly for smaller, deposit-funded, and less diversified institutions, and presenting long-lasting challenges for life insurers and defined-benefit pension funds. Near-term outlook: Global growth is projected at -4.4% in 2020, a less severe contraction than forecast in the June 2020 World Economic Outlook Update. Other Statistical ... 03 Dec 2020. Weak profitability could erode banks’ buffers over time and undermine their ability to support growth. Description: support activity and boost inflation—may lead to a continued search for yield Scheduled Commercial Banks’ (SCBs) credit growth remained subdued at 8.7% year-on-year (y-o-y) in September 2019, down from 13.2% in March 2019. rise in household debt. Global Financial Stability Report by the International Monetary Fund (IMF) 7. However, some banks are still The frauds reported by the banks touched an all-time high of around Rs 1.13 lakhs in FY19. enhancements, and the cyclical upturn in growth. enhancements, and the cyclical upturn in growth. beyond their traditional habitats. This GFSR also examines the short- and medium-term implications for downside risks to growth and financial stability of the riskiness of corporate credit allocation. The International Monetary Fund (IMF) releases the Global Financial Stability Report twice in a year — April and October. The October 2018 Global Financial Stability Report (GFSR) finds that global near-term risks to financial stability have increased somewhat, reflecting mounting pressures in emerging market economies and escalating trade tensions. Capital to Risk-weighted Assets Ratio (CRAR): Challenges to kick start growth in the economy: Please Share with maximum friends to support the Initiative. Global Financial Stability Report: Markets in the Time of COVID-19 April 14, 2020 Description: The coronavirus (COVID-19) pandemic poses unprecedented health, economic, and financial stability challenges. Corporate leverage in emerging market economies remains elevated in some countries, but the current favorable external environment presents an opportunity for overly indebted firms to restructure their balance sheets. For UPSC 2020 … It also includes the chairman of the Insolvency and Bankruptcy Board (IBBI). Medium-term risks are still elevated as financial vulnerabilities, which have built up during the years of accommodative policies, could mean a bumpy road ahead and put growth at risk. The 20th FSR report was released in December 2019. The October 2019 Global Financial Stability Report (GFSR) identifies the current key vulnerabilities in the global financial system as the rise in corporate debt burdens, increasing holdings of riskier and more illiquid assets by institutional investors, and growing reliance on external borrowing by emerging and frontier market economies. This may lead The chapter also identifies areas in which consolidation or further progress is needed and warns against rolling back reforms, which might make the global financial system less safe. Policymakers at both the national and global level will Global bank balance sheets are Another chapter assesses the ability of country authorities to influence domestic financial conditions in a financially integrated world. For the first time, many emerging market central banks have launched asset purchase programs to support the smooth functioning of financial markets and the overall economy. A Decade after the Global Financial Crisis: Are We Safer? In addition, a shift toward protectionism in advanced economies could reduce global growth and trade, impede capital flows, and dampen market sentiment. Global Growth Outlook. The year also saw the benchmark indices breaching record levels on various occasions with the 30-share Sensex touching a high of 41,810 on December 20. The report gives various scenarios for the impact of COVID-19 pandemic on different indicators (refer to infographics). Economic activity has gained momentum and longer-term interest rates have risen, helping to boost the earnings of banks and insurance companies. IMF Members' Quotas and Voting Power, and Board of Governors, IMF Regional Office for Asia and the Pacific, IMF Capacity Development Office in Thailand (CDOT), IMF Regional Office in Central America, Panama, and the Dominican Republic, Financial Sector Assessment Program (FSAP), Currency Composition of Official Foreign Exchange Reserves, Global Financial Stability Report Update: Financial Conditions Have Eased, but Insolvencies Loom Large, Global Financial Stability Report: Markets in the Time of COVID-19, Global Financial Stability Report, October 2019: Lower for Longer, Vulnerabilities in a Maturing Credit Cycle. 1) rbi releases the financial stability report (sr) july 2020 FSR is a bi-annual report that reflects risks to financial stability and the resilience of the financial system. putting growth at risk. Although the global banking system is stronger than before the crisis, it is exposed to highly indebted borrowers as well as to opaque and illiquid assets and foreign currency rollover risks. The Programme for International Student Assessment (PISA) Organisation of Economic Development and Cooperation (OECD) 12. The coronavirus (COVID-19) pandemic poses unprecedented health, economic, and financial stability challenges. ratios across countries but a common increasing trajectory that was moderated Global Financial Stability Report October 2017: Is Growth at Risk? Download PDF for IAS Exam. More vulnerable firms—those with weaker solvency and liquidity positions and smaller size—experienced greater financial stress than their peers in the early stages of the crisis. Promoting global financial stability through strong financial sector policies. The report is biennial and reflects the collective assessment of the Sub-committee of Financial Stability and Development Council. In such an environment, yield curves would likely flatten. World Development Report – UNCTAD; Global Financial Stability Report – IMF; World Investment Report – IBRD (World Bank) Global Competitiveness Report – World Economic Forum Select the correct answer using the codes given below: A. The April 2019 Global Financial Stability Report (GFSR) finds that despite significant variability over the past two quarters, financial conditions remain favourable. For the first time, many emerging market central banks have launched asset purchase programs to support the smooth functioning of financial markets and the overall economy. The solvency of many life insurance companies and pension funds is threatened by a prolonged period of low interest rates. Although the global banking system is well capitalized, some banking systems may experience capital shortfalls in an adverse scenario, even with the currently deployed policy measures. The number of cases that accounted for the fraud was 4,412. All banks’ Capital to Risk-weighted Assets Ratio (CRAR) improved to 15.1% in September 2019 from 14.3% in March 2019, following the recapitalisation of PSBs by the government. The Reserve Bank of India has released the 19th issue of the Financial Stability Report (FSR).. In addition, a shift toward protectionism in advanced economies could reduce global growth and trade, impede capital flows, and dampen market sentiment. These vulnerabilities require action by policymakers, including through the clear communication of any changes in their monetary policy outlook, the deployment and expansion of macroprudential tools, the stepping up of measures to repair public and private sector balance sheets, and the strengthening of emerging market resilience to foreign portfolio outflows. Description: Furthermore, there should be no rollback of the postcrisis reforms that have strengthened oversight of the financial system. The twin engines of consumption and investment remain the key challenge even while remaining vigilant about spillovers from global financial markets. The IMF released it’s 2020 edition of the global financial stability report on the backdrop of the Corona crisis and economic impacts. Description: As the search for yield intensifies, vulnerabilities UPSC had tested the knowledge of aspirants about the names of reports published by various organisations in Civil Services Examination Prelims 2014 and Civil Services Examination Prelims 2015. CAR = (Tier 1 Capital + Tier 2 Capital)/Risk weighted Assets. This is a part of our recently launched, NEW INITIATIVE IASbaba’s INTEGRATED REVISION PLAN (IRP) 2020 – Road Map for the next 100 Days! FSB report highlights increased use of RegTech and SupTech. Emerging market economies experienced the sharpest reversal of portfolio flows on record. It finds that the improvements over the past two decades have helped bolster the resilience of their financial systems. It finds that the broad agenda set by the international community has given rise to new standards that have contributed to a more resilient financial system—one that is less leveraged, more liquid, and better and more intensively supervised, especially at large banks. The International Monetary Fund (IMF) released the Global Financial Stability Report (GFSR) is a semiannual report. It documents the cyclical nature of the riskiness of corporate credit allocation at the global and country levels and its sensitivity to financial conditions, lending standards, and policy and institutional settings. What has changed in Jammu & Kashmir after the abrogation of Article 370? Series: Global Financial Stability Report No. Central banks should continue to normalize policy gradually and communicate clearly, while policymakers should address vulnerabilities by deploying and developing macroprudential tools. Apr 13, 2020 03:30 PM IMF Press Briefing: April 2020 Global Financial Stability Report The International Monetary Fund releases its latest Global Financial Stability Report during the Spring Meetings on April 14, 2020. Valuations of risky assets are still stretched, and liquidity mismatches, leverage, and other factors could amplify asset price moves and their impact on the financial system. Weak profitability could erode banks’ buffers over time and undermine their ability to support growth. Global Financial Stability Report, October 2020 Bridge to Recovery Near-term global financial stability risks have been contained as an unprecedented policy response to the coronavirus (COVID-19) pandemic has helped avert a financial meltdown and maintain the flow of credit to the economy. to a further compression of risk compensation in markets and higher leverage in It finds that the improvements over the past two decades have helped bolster the resilience of their financial systems. Relevance:Prelims: Current events of national and international importance.Mains: GS III-. The forms of shadow banking more closely related to the global financial crisis have been curtailed, and most countries now have macroprudential authorities and some tools with which to oversee and contain risks to the whole financial system. Medium-term risks are still elevated as financial vulnerabilities, which have built up during the years of accommodative policies, could mean a bumpy road ahead and put growth at risk. Decisive monetary, financial, and fiscal policy actions—aimed at containing the fallout from the pandemic—managed to stabilize investor sentiment in late March–early April, with markets paring back some of their losses. It was 9.9% in September 2019 and may rise to 9.9% in September 2020. Policymakers and investors must remain attuned to the risks of rising interest rates and higher market volatility. The FSR reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC - headed by the Governor of RBI) on risks to financial stability and the resilience of the financial system. 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