London —
FSB chair Randal Quarles said the effect of the coronavirus pandemic on credit markets and investment funds has highlighted potential vulnerabilities and the need to understand the risks and resulting policy implications. “Shadow banking”, which also includes money-market funds, hedge funds and private equity, has grown significantly since the financial crisis a decade ago, moving into bank-like activities, such as credit, as traditional lenders became more risk averse.
He said the FSB is guiding G20 members on using existing flexibility in global rules, while also preserving collective support for the standards. “It will become increasingly important to assess the effect of measures taken and to ensure that these policies are effective in the near term, and, eventually, to give a strong basis for deciding on when, and how, to return to more normal operations in the financial sector.