By ZBC Reporter
THE International Monetary Fund (IMF) says approval and rollout of vaccines has boosted expectations of a global recovery despite rising COVID-19 cases and persistent uncertainties surrounding the economic outlook.
In a statement Director of the Monetary and Capital Markets Department at the International Monetary Fund, Tobias Adrian said banks have endured the COVID-19 downturn so far after learning from the 2008 global financial crisis.
We have spent the last decade reforming the regulations of the banks. They went into the crisis with a lot of capital, a lot of liquidity. And even though we saw a very, very sharp economic contraction, the support on the monetary side and the fiscal side has contained the bankruptcy so far. So, the banks are in good shape. So that is extremely important from a financial stability point of view, he said.
Fabio Natalucci, Deputy Director of the Monetary and Capital Markets Department also highlighted that uneven vaccine distribution and unsynchronised recovery could risk capital flows to emerging market economies.
Uneven distribution of vaccine creates this risk of asynchronous recovery. . There’s also an issue in terms of recovery. So, if you get this asynchronous recovery out of this country lags behind, they could lose market access, the financial condition may tighten. And then you would see really an increase in poverty. You could see an increase in inequality. So that’s why it’s important that we tackle this as a global issue at the global level, and there is an equitable, even distribution of vaccine across the globe. That’s priority number one, noted Natalucci.
Decision-makers have been urged to take advantage of the easy financing conditions presented by the COVID-19 pandemic to prepare for an uncertain future.
Governments have also been encouraged not to pull the plug on monetary and fiscal support as it is vital to reduce lingering uncertainties, build bridges for recovery, and ensure financial stability.