Question

Global crisis such as the COVID19 pandemic may prompt the introduction of new regulations

or the revision of existing ones to ensure financial system stability and soundness during and

after such crisis. Discuss the effects of the COVID19 pandemic on financial regulations and

regulatory changes. Discuss the implications of global regulatory response to the

COVID19 pandemic to the financial services firms. Propose a risk management

framework for any of the sub-sectors of the financial services sector with the aim of ensuring

the sub-sector’s resilience during and after the COVID19 pandemic

Answer 1

Ans ) COVID - 19 is a major pendemic that engulfed there entire planet.The global lockdown not only hampered production and distribution but leads to a crisis of non operation of key industrial sectors of the world.The demands for goods and services other than food stuffs and pharma.The worst effect on the financial sector is the negative sentiments that prevails during the crisis.The financial slowdown reflected in the major economies of the world lead to the decline in the entire financial system of the world.The governments around the world are lowering the interest rate inorder to boost the demand but the measures are not effective as the mortality rate around the major industrialised western Europe and America.The Stock markets indices showed decline in a significant manner.The Securities and exchange commission SEC is the first to provide the relief to the affected parties.SEC is continuing its operations of monitering market functions and systematic risks.Providing relief in terms of regulatory concerns and prividing guidence to issuers exchanges and other registered impactants.Protecting the rights of the investors in this critical time and safegaurding the investors against any type of financial frauds.There are regulatory circular published to the firms for the additional impact due to COVID 19.There are stimulas packages given vy the governments around the globe and the relief guidelines are issued to banks to be less stringent in terms of collection of interest on loans along with the principal amount.The sub sector of financial system that is very critical is the banking system .As Banks perform the critical functions of mobility of capital and converting savings into investments , but the slowdown in the economy has resulted a gap in the circle of savings , lendings and intern the mobalisation of capital and providing funds for the investments but because of the economic shutdown, the effect on banking sector is huge as the deposits are declining in the panic situation people are withdrawing money and due to slow industrial outputs the demands for funds has reduced.The risk framework for the banking sector is banks core capital is to be increased and the banks should have technological capabilities to handle the situation of non opertions , the banks should concentrate on the long term impact of the COVID 19 on the banking sector.The risk framework should includes employees health facility development and promotion of techniques like work from home.The banks should forcasts the slow recovery of interest on loans and principal for that it has a plan for investing in new avenue like health and Pharma portfolio so as to earn a high return on investments.