Asia finance chiefs tackle uneven pace of recovery

MANILA, Philippines — Financial authorities in Asia are collaborating closely to address possible effects of difference paces of recovery from the pandemic-induced global recession, according to the Regional Consultative Group for Asia (RCGA) of the Financial Stability Board (FSB).

 Bangko Sentral ng Pilipinas Governor Benjamin Diokno said 17 Asian jurisdictions of the RCGA continue to focus on the damages caused by the economic fallout from COVID-19 as well as the steps taken by the financial authorities.

Dioko, who co-chaired the meeting, said members are weighing the balance between responding to the current needs of the market and any possible longer-term implications.

The group, according to Diokno, believes the unconventional interventions needed to cushion the impact of the global health crisis can affect market conditions over time.

The added complication that the authorities have cited is the possible effects from different paces of recovery across different jurisdictions.

Multilateral agencies   said the prospects of the advanced economies are diverging from that of the emerging markets, and this has spillover effects. 

“The questions have sharpened as we now see clearer, but apparently more divergent paths in front of us. Knowing how these different paths affect each one of us will require a lot of discussion to fully appreciate its holistic interactions,” Diokno said.

“What is clear is that there remain systemic risks, both risks to the financial system and risks by the financial system itself,” Diokno said.

Communication initiatives and macroprudential stress tests were also prominently discussed at the meeting and participants agreed that keeping stakeholders informed has been critical in sustaining the concerted efforts amid the global recession.

The authorities highlighted the important results of the stress tests are used as the basis for early action.

“That crucial stage where actions today will more so define the market landscape of the future,” Diokno said.

 The FSB was created in 2009 as a global venue for organizing the reform of the financial system in light of the call to pursue the objective of financial stability after the global financial crisis. The RCGA is one of the six regional committees created by the FSB in 2011.