The G20 recommended maintaining official aid until the global economy stabilizes

the Financial Stability Board (FSB), which integrates the G20 countries, recommended to maintain public aid until the global economy stabilizes.

In a letter, the president of the FSB, Randal K. Quarles, he communicated to G20 finance ministers and central bank governors What Vaccination programs mark turning point in COVID-19 pandemic.

However, he warned that “The withdrawal of support measures before the macroeconomic outlook stabilizes could be associated with significant immediate risks to financial stability”.

On the other hand, he considered that they could appear other risks to financial stability if support measures are maintained for too long.

Most authorities believe that the costs of “withdrawing support prematurely may be greater than maintaining it too long”, according to the letter.

The member countries of the FSB, an organization headquartered in the Swiss city of Basel, have committed to coordinate the withdrawal of state support measures for economies.

The entity appreciates the progress made in the banking reforms to prevent very large banks from going bankrupt and endangering the stability of the financial system (too big to fail).

These reforms have reduced risks to the global financial system, increased the credibility of resolution and market discipline, and ultimately produced net benefits to society.

But the FDB also considers that can further develop these reforms, in particular with regard to the ability to absorb total losses and transparency of resolution funding.

Some risks have shifted from the banking system to non-bank financial intermediation.

The letter to G20 finance ministers and central bank governors, meeting virtually on Wednesday, also highlighted importance of tackling climate change issues.

Three teams work at the FSB on issues related to data, reporting, regulation and supervision, and in July they will provide the G20 with two reports with recommendations on the roadmap to be followed in addressing the financial risks of climate change.

It also stresses the importance of conducting a “Strategic vision”, “good coordination” and “clear communication” to the G20.

To allow better coordination, the Council invited the Network to green the financial system to participate in their work related to climate change.

The Financial Stability Board was created in the G20 meeting in London in 2009 due to financial crisis and since then, has been watching over financial stability.

(With information from EFE)

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