stronger because of improved capital and liquidity buffers, amid tighter Corporate governance is a concern across India Inc. This GFSR also examines the short- and medium-term implications for downside risks to growth and financial stability of the riskiness of corporate credit allocation. FSB publishes annual report on non-bank financial intermediation 19 January 2020. 2017 - 18 : 67th ANNUAL REPORT. The Global Financial Stability Report provides an assessment of the global financial system and markets, and addresses emerging market financing in a global context. The FSR reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability, as also the resilience of the financial system. Although the global banking system is stronger than before the crisis, it is exposed to highly indebted borrowers as well as to opaque and illiquid assets and foreign currency rollover risks. The 20th FSR report was released in December 2019. Higher inflation may lead central banks to respond more aggressively than currently expected, which could lead to a sharp tightening of financial conditions. World Economic Outlook reports. Another chapter analyzes whether and how house prices move in tandem across countries and major cities around the world—that is, global house price synchronicity. On December 27, 2019, RBI released Financial Stability Report. Near-term global financial stability risks have been contained as an unprecedented policy response to the coronavirus (COVID-19) pandemic has helped avert a financial meltdown and maintain the flow of credit to the economy. The Financial Stability and Development Council (FSDC) was constituted in December 2010. Global Financial Stability Report, October 2020 Bridge to Recovery Near-term global financial stability risks have been contained as an unprecedented policy response to the coronavirus (COVID-19) pandemic has helped avert a financial meltdown and maintain the flow of credit to the economy. It was 9.9% in September 2019 and may rise to 9.9% in September 2020. Reviving the twin engines of consumption and investment while being vigilant about spillovers from global financial markets remains a critical ... friends to support the Initiative. Key Points About the state of the financial sector: Provisioning Coverage Ratio (PCR) refers to the prescribed percentage of funds to be set aside by the banks for covering the prospective losses due to bad loans. Global Financial Stability Report: International Monetary Fund (IMF) 10. Description: Medium-term financial stability risks remain elevated, driven by high non–financial sector leverage in advanced economies and rising external borrowing in emerging markets. For the first time, many emerging market central banks have launched asset purchase programs to support the smooth functioning of financial markets and the overall economy. Weak profitability could erode banks’ buffers over time and undermine their ability to support growth. Emerging market economies should address domestic imbalances to enhance their resilience to external shocks. Indian Economy and issues relating to planning, mobilization of resources, growth, development, and employment. Near-term outlook: Global growth is projected at -4.4% in 2020, a less severe contraction than forecast in the June 2020 World Economic Outlook Update. Policymakers and investors must remain attuned to the risks of rising interest rates and higher market volatility. The report also assesses the pandemic’s impact on firms’ environmental performance to gauge the extent to which the crisis may result in a reversal of the gains posted in recent years. The report also examines how the rise of nonbank financing has altered the impact of monetary policy and finds that fears of a decline in the effectiveness of monetary policy are unfounded. Description: The FSR reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC - headed by the Governor of RBI) on risks to financial stability and the resilience of the financial system. league for pastoral peoples report. Slippages: Fresh accretion of NPAs during the year or falling below the current position of standard assets of the bank is a slippage. the probability distribution of future GDP growth and applies it to a set of 20 enhancements, and the cyclical upturn in growth. Explanation. A lack of income growth and a rise in inequality have opened the door for populist, inward-looking policies. banks increased to 61.5% in September 2019 from 60.5% in March 2019. Analyzing the Role of Judiciary in the last 5 years, SMAP 2020 | Day 73 | Mains Practice Question on Environment and Biodiversity (GS III), SMAP 2020 | Day 72 | Mains Practice Question on Environment and Biodiversity (GS III), Issues related to Farm Subsidies in India. More vulnerable firms—those with weaker solvency and liquidity positions and smaller size—experienced greater financial stress than their peers in the early stages of the crisis. The report proposes that policymakers mitigate these risks through stricter supervisory and macroprudential oversight of firms, strengthened oversight and disclosure for institutional investors, and the implementation of prudent sovereign debt management practices and frameworks for emerging and frontier market economies. stronger because of improved capital and liquidity buffers, amid tighter The asset quality of agriculture and services sectors, as measured by their GNPA ratios, deteriorated to 10.1% in September 2019 from about 8% in March 2019. Denominator effect: The denominator effect is a way of describing the impact the crisis had on portfolios, especially those of large institutions such as endowments. • India is a projected to grow by 1.9% in 2020 (down from its Jan 2020 projection of 5.8%) and 7.4% in 2021. Mrunal Economy PPT September 2020 Batch( 58 PPT) UPSC Prelims Mock Tests 250+ ( Both Papers ) Vajiram New Yellow Booklets 2020; A cyclical recovery will not resolve the problem of low profitability. 2020 global hunger index. Page: 1 of 4 Emerging market economies should address domestic imbalances to enhance their resilience to external shocks. Policymakers at both the national and global level will implications for economic growth and financial stability of the past decades’ However, some banks are still Emerging market economies experienced the sharpest reversal of portfolio flows on record. 1) rbi releases the financial stability report (sr) july 2020 FSR is a bi-annual report that reflects risks to financial stability and the resilience of the financial system. 4. It focuses on current market conditions, highlighting systemic issues that could pose a risk to financial stability and sustained market access by emerging market borrowers. Inclusive growth and issues arising from it. As a result, financial conditions tightened at an unprecedented speed. been uneven. World Economic Outlook, October 2020: A Long and Difficult Ascent, Global Financial Stability Report: Bridge to Recovery, Fiscal Monitor: Policies for the Recovery. The Council is chaired by the Union Finance Minister and its members are Governor, Reserve Bank of India; Finance Secretary and/or Secretary, Department of Economic Affairs; Secretary, Department of Financial Services; Chief Economic Adviser, Ministry of Finance; Chairman, Securities and Exchange Board of India; Chairman, Insurance Regulatory and Development Authority and Chairman, Pension Fund Regulatory and Development Authority. Corporate leverage in emerging market economies remains elevated in some countries, but the current favorable external environment presents an opportunity for overly indebted firms to restructure their balance sheets. In most cases, debt is classified as non-performing, when the loan payments have not been made for a minimum period of 90 days. The October 2019 Global Financial Stability Report (GFSR) identifies the current key vulnerabilities in the global financial system as the rise in corporate debt burdens, increasing holdings of riskier and more illiquid assets by institutional investors, and growing reliance on external borrowing by emerging and frontier market economies. but not reversed by the global financial crisis. The state-run banks’ GNPA ratios may increase to 13.2% by September 2020 from 12.7% in September 2019. The October 2017 The chapter finds a striking increase in house price synchronization across the countries and cities. Global Financial Stability Report by the International Monetary Fund (IMF) 7. Sign up to receive free e-mail notices when new series and/or country items are posted on the IMF website. These benefits strengthen the case for further reform. Another chapter assesses the ability of country authorities to influence domestic financial conditions in a financially integrated world. ... UPSC IAS 2020 Exam: Click here to get the Complete 30 Days Study Plan to score high in Prelims. It appears that the transmission of monetary policy is, if anything, stronger in economies with larger nonbank financial sectors. Valuations of risky assets are still stretched, and liquidity mismatches, leverage, and other factors could amplify asset price moves and their impact on the financial system. As the crisis unfolds, corporate liquidity pressures may morph into insolvencies, especially if the recovery is delayed. Emerging markets have generally improving fundamentals, but could be vulnerable to sudden tightening of global financial conditions. CAR = (Tier 1 Capital + Tier 2 Capital)/Risk weighted Assets. Relevance:Prelims: Current events of national and international importance.Mains: GS III-. The coronavirus (COVID-19) pandemic poses unprecedented health, economic, and financial stability challenges. putting growth at risk. The October 2017 Global 2 to a further compression of risk compensation in markets and higher leverage in Financial institutions in advanced economies face a number of cyclical and structural challenges and need to adapt to low growth and low interest rates, as well as to an evolving market and regulatory environment. FSB report highlights increased use of RegTech and SupTech. are shifting to the nonbank sector and market risks are rising. But the outlook remains highly uncertain, and vulnerabilities are rising, representing potential headwinds to recovery. It contains, as special features, analytical chapters or essays on structural or systemic issues relevant to international financial stability. It appears that the transmission of monetary policy is, if anything, stronger in economies with larger nonbank financial sectors. The forms of shadow banking more closely related to the global financial crisis have been curtailed, and most countries now have macroprudential authorities and some tools with which to oversee and contain risks to the whole financial system. have to strengthen the financial and macroeconomic policy mix. The Global Financial Development Report 2019/2020 provides new data and evidence on the regulatory remedies adopted to prevent future financial instability and sheds light on ongoing policy debates. International Monetary Fund (IMF) Nuclear Technology Review. The frauds reported by the banks touched an all-time high of around Rs 1.13 lakhs in FY19. The report presents an assessment of the real-financial disconnect, as well as forward-looking analysis of nonfinancial firms, banks, and emerging market capital flows. It also finds that global financial conditions contribute to this synchronization, which suggests that policymakers should be alert to the possibility that shocks to house prices elsewhere may affect housing markets at home. Getting the policy mix right is crucial. The report also assesses the pandemic’s impact on firms’ environmental performance to gauge the extent to which the crisis may result in a reversal of the gains posted in recent years. An apex-level FSDC is not a statutory body. The FSDC was set up to strengthen and institutionalise the mechanism for maintaining financial stability, enhancing inter-regulatory coordination and promoting financial sector development. Context: On December 27, 2019, RBI released the Financial Stability Report. rise in household debt. Why in News. Economic activity has gained momentum and longer-term interest rates have risen, helping to boost the earnings of banks and insurance companies. support activity and boost inflation—may lead to a continued search for yield If policy developments in advanced economies make the path for growth and debt less benign than expected, risk premiums and volatility could rise sharply. It also includes the chairman of the Insolvency and Bankruptcy Board (IBBI). This may lead Central banks should continue to normalize policy gradually and communicate clearly, while policymakers should address vulnerabilities by deploying and developing macroprudential tools. We endeavor to answer all inquiries within 24 hours on business days. It reviews the main precrisis failings in financial sector oversight and assesses the progress in implementation of the reform agenda designed to address these failings. In such an environment, yield curves would likely flatten. This all raises the urgency for policymakers to step up efforts to boost the financial system’s resilience by completing the financial regulatory reform agenda as well as developing and deploying macroprudential policy tools. The Report draws out the financial ramifications of economic imbalances highlighted by the IMF's World Economic Outlook. But the outlook remains highly uncertain, and vulnerabilities are rising, representing potential headwinds to recovery. A potent and more balanced policy mix is needed to deliver a stronger path for growth and financial stability, and avoid slipping into a state of financial and economic stagnation. The October 2016 Global Financial Stability Report (GFSR): The current report finds that short-term risks to global financial stability have abated since April 2016, but that medium-term risks continue to build. Economic activity has gained momentum and longer-term interest rates have risen, helping to boost the earnings of banks and insurance companies. When the PCR is higher, the unexposed part of bad loans is lower. Decisive monetary, financial, and fiscal policy actions—aimed at containing the fallout from the pandemic—managed to stabilize investor sentiment in late March–early April, with markets paring back some of their losses. implications for economic growth and financial stability of the past decades’ 3 It is the ratio that gives an indication of the provisions made against bad loans. Other Statistical Information. The frauds reported between 2001-18 accounted for 90% of the frauds registered in 2019 alone. After the outbreak, firms’ cash flows were adversely affected as economic activity declined sharply. continues to strengthen in response to extraordinary policy support, regulatory Small and medium-sized enterprises (SMEs) are more vulnerable than large firms with access to capital markets. poverty and shared prosperity report. The forms of shadow banking more closely related to the global financial crisis have been curtailed, and most countries now have macroprudential authorities and some tools with which to oversee and contain risks to the whole financial system. The April 2017 Global Financial Stability Report (GFSR) finds that financial stability has continued to improve since last October. Despite these improvements, however, threats to financial stability are emerging from elevated political and policy uncertainty around the globe. For UPSC 2020 … The credit losses have jumped by 7.33% as compared to June 2019. The report presents an assessment of the real-financial disconnect, as well as forward-looking analysis of nonfinancial firms, banks, and emerging market capital flows. where there is too much money chasing too few yielding assets, pushing investors World Development Report – UNCTAD; Global Financial Stability Report – IMF; World Investment Report – IBRD (World Bank) Global Competitiveness Report – World Economic Forum Select the correct answer using the codes given below: A. Global Financial Stability Report: Markets in the Time of COVID-19 April 14, 2020 Description: The coronavirus (COVID-19) pandemic poses unprecedented health, economic, and financial stability challenges. major advanced and emerging market economies. ratios across countries but a common increasing trajectory that was moderated FPIs are often considered to be the prime drivers of any bull run in the Indian stock markets. The Global Financial Stability Report focuses on the financial ramifications of the economic issues that are highlighted in the IMF’s World Economic Outlook Report. Near-term global financial stability risks have been contained as an unprecedented policy response to the coronavirus (COVID-19) pandemic has helped avert a financial meltdown and maintain the flow of credit to the economy. Several factors amplified asset price moves: previously overstretched asset valuations, pressures to unwind leveraged trades, dealers’ balance-sheet constraints, and a deterioration in market liquidity. but not reversed by the global financial crisis. rise in household debt. FSB FINANCIAL STABILITY BOARD Global Monitoring Report on Non-Bank Financial Intermediation 2019. Foreign banks’ (FB) GNPA ratio may increase to 3.1% from 2.9% in September 2019. 1 to a further compression of risk compensation in markets and higher leverage in Policymakers and investors must remain attuned to the risks of rising interest rates and higher market volatility. More vulnerable firms—those with weaker solvency and liquidity positions and smaller size—experienced greater financial stress than their peers in the early stages of the crisis. Crypto assets have features that may improve market efficiency, but they could also pose risks if used with leverage or without appropriate safeguards. The global economy confronted a number of uncertainties – a delay in the Brexit deal, trade tensions, oil-market disruptions and geopolitical risks – leading to significant deceleration in growth.