Pandemic poses serious threat to global financial system: FSDC

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Covid-19 poses a serious threat to the stability of the global financial system as there is no certainty about the extent of its impact and even the timing of recovery from the pandemic situation cannot be predicted at this point of time, an apex committee of financial sector regulators chaired by finance minister Nirmala Sitharaman said on Thursday.

The 22nd meeting of the Financial Stability and Development Council (FSDC) concluded that the recent fiscal and monetary measures had helped to stabilise the investor sentiment in the short-run.

“There is a need to keep a continuous vigil by (the) government and all regulators on the financial conditions that could expose financial vulnerabilities in the medium and long-term,” an official statement issued after the council’s meeting said.

The efforts of the government and regulators are focused on avoiding a prolonged period of dislocation in financial markets, it said.

FSDC was formed in December 2010 to enhance inter-regulatory coordination and promoting financial sector development. Union finance minister is the chairman of the council and its members include heads of financial sector regulators—the Reserve Bank of India (RBI), the Securities and Exchange Board of India (Sebi), the Pension Fund Regulatory and Development Authority of India (PFRDA), the Insurance Regulatory and Development Authority (IRDA) and the Forward Markets Commission (FMC). Other members of the council include the finance secretary, the economic affairs secretary, the financial services secretary and the chief economic adviser.

The meeting on Thursday was attended by minister of state for finance Anurag Thakur, RBI governor Shaktikanta Das, finance secretary Ajay Bhushan Pandey, economic affairs secretary Tarun Bajaj, secretary financial services Debasish Panda, ministry of electronics and information technology secretary Ajay Prakash Sawhney, corporate affairs secretary Injeti Srinivas, Sebi chairman Ajay Tyagi, IRDA chairman Subhash Chandra Khuntia and PFRDA chairperson Supratim Bandyopadhyay among others.

The meeting reviewed the current global and domestic macro-economic situation, financial stability and vulnerabilities issues, major issues likely to be faced by banks and other financial institutions as also regulatory and policy responses, the statement said. Market volatility, domestic resource mobilisation and capital flows issues were also discussed by the council, it added.

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