COVID-19 has taken a colossal toll of lives and livelihood and posed a cataclysmic threat to global financial stability.
Given the unprecedented nature of the crisis, central banks have been called to the frontline again and have mobilised an unprecedented defence, involving both conventional and unconventional instruments – interest rate reduction; funding liquidity and market liquidity expansion; asset purchases; credit easing; macroprudential policies; and swap lines – to keep financial markets and financial intermediaries functional, and to preserve global financial stability.
As a result of these measures1, equity markets recovered from their troughs, credit spreads narrowed from peaks, investor confidence improved, and risk appetite is gaining traction.
This week we came up with the chapter 3 of FSR. Please have a look at it.