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Exit strategies to support equitable recovery and address effects from COVID-19 scarring in the financial sector

Recovery from the economic impacts of the COVID-19 crisis has been divergent across jurisdictions. Limited ability to provide additional policy support, in particular in the form of fiscal stimulus, has been a factor behind a relatively weaker recovery in many emerging market and developing economies (EMDEs) than in advanced economies (AEs).

Russia’s invasion of Ukraine has added substantially to these pre-existing challenges, by causing a setback to global growth, triggering higher inflation, and adding to economic uncertainty.

This exacerbates challenges for policy makers in supporting a strong, equitable and inclusive recovery. Vulnerabilities from the COVID-19 crisis may now materialise at a time when policy space is limited and firms and households have reduced financial buffers. Moreover, a more uneven global recovery increases the risk of negative spillovers. Taken together, these setbacks may imply that the scarring effects from the pandemic have a greater potential to damage future growth.

This interim  report considers exit strategies through the lens of financial stability and the capacity of the financial system to finance strong and equitable growth. The report discusses the following issues:

  • Ensuring effectiveness of domestic policies (including targeting policy measures and timing them appropriately),
  • Containing cross-border spillovers (including addressing excessive procyclicality)
  • Preventing scarring and dealing with debt overhang (including distinguishing viable and non-viable companies)
  • The role of international standards during the exit and beyond (including the use of flexibility in standards and their role in the design and unwinding of measures).

It primarily reflects experiences through to the first quarter of 2022.The final report, to be delivered to the G20 in November 2022 will consider relevant new economic developments and input from stakeholders, and will present conclusions regarding the financial stability issues related to scarring effects from COVID-19, and how the FSB will address these issues going forward.

The FSB invites feedback from stakeholders on the report and in particular on the following questions: 

  1. How do you view the potential impacts of authorities’ exit from COVID-19 support measures on equitable recovery and remaining challenges for financial stability from potential scarring effects, particularly in EMDEs? Do you agree with the conclusions of the FSB interim report?
  2. How have the effects from the Russian invasion of Ukraine and the changed global macroeconomic outlook altered the financial stability issues related to scarring effects from COVID-19 going forward?
  3. Do existing (e.g. asset quality) indicators used by firms or authorities accurately capture the underlying risks and vulnerabilities? What data would be useful for informing policy for targeting, narrowing down and phasing out of support measures? 
  4. In which (other) ways can financial institutions globally support equitable recovery, in particular in EMDEs? Which policy considerations may be relevant for authorities in this context?

Please submit any written feedback in a Word or PDF document via the below form by Friday 23 September.

For questions, please contact the FSB (

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