Reflections on Financial Regulators’ Initial Responses to COVID-19

Policy Research Department Ryozo Himino

■要旨

More than two years have passed since the outbreak of COVID-19. The world may have to live with the pandemic and its legacies for further years, but the two years may already allow us to look back on the initial emergency responses and attempt to tentatively assess them.

At the time of the outbreak and until September 2021, the author chaired the Standing Committee on Supervisory and Regulatory Cooperation (SRC) of the Financial Stability Board (FSB), which globally coordinated financial sector policy responses to the pandemic. Below are my recollections of financial regulators’ concerns, how they designed the responses, and the role that financial sector policy played as part of the overall economic policy responses. I focus on global responses but also refer to Japanese initiatives.

The first section describes the four main concerns regulators had at the onset. The second section reviews the responses to address concerns over operational risks. The third section discusses responses to market and liquidity risks. The fourth section is about responses to secure continued financing while addressing solvency risks, and the fifth section reviews the modality of international coordination. The sixth section concludes.

Each jurisdiction faced different challenges. The unprecedented shock resulted in diversity in views even within a jurisdiction. I highlight a common denominator but will inevitably be biased by my personal views. The narrative will not necessarily represent the view of the FSB or its member institutions or the Japanese Financial Services Agency (JFSA) at the time.

■目次

1――Four concerns
2――Responses to address operational risk concerns
3――Responses to address market and liquidity risks
4――Responses to prevent a credit crunch and to address solvency risks
5――International coordination
6――In retrospect