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Patterns—and some implications—of Covid-19 financial sector policy interventions

Patterns—and some implications—of Covid-19 financial sector policy interventions

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Since the coronavirus outbreak (COVID-19) began in December, more than 1,400 measures have been adopted to support the financial sector by more than 140 different countries. The magnitude of this response reflects the severity of the economic damage caused by measures to halt the pandemic. The goals are to stabilize financial markets, so that credit and liquidity can keep flowing to the most affected and vulnerable sectors—especially small and medium enterprises, as well as households.

The financial sector is a key element to help countries mitigate the impact of the crisis on firms and households, and to support the recovery.  Yet, a fundamental trade-off might arise between the positive countercyclical role that credit institutions are called to play now, versus their future resilience, since lenders might exhaust their existing buffers while experiencing deterioration of asset quality.

The World Bank has been tracking and analyzing the financial sector policy measures taken since late February. We have grouped them into four main categories of intervention: injecting liquidity and easing monetary conditions, supporting the banking sector and its borrowers, stabilizing financial markets and supporting Non-Bank Financial Institutions, and underpinning payments systems (see Figure 1, from our dashboard on financial sector measures).

Figure 1. Financial Sector Support Measures in Response to COVID-19

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Figure 1. Financial Sector Support Measures in Response to COVID-19
Source: COVID-19 policy response FCI tracker and Dashboard

As the figure shows, most countries and regions have enacted emergency measures to provide liquidity and support financial institutions. In the early days of the crisis, a number of countries banned short selling to curtail market volatility. Confronted by massive capital outflows, several emerging markets and developing economies have intervened in foreign exchange markets and established swap lines with other central banks, mostly with the U.S. Federal Reserve. On the other hand, low-income countries, especially in sub-Saharan Africa, have approved measures targeting the payments sector, mainly to encourage the use of digital channels and mitigate the shock to remittance flows. These include waiving charges and fees and simplifying electronic Know Your Customer (eKYC) and digital identification procedures.

Overall, more than half of the 1,415 measures approved thus far target the banking sector and, within this category, almost two-thirds are prudential measures taken by regulators and supervisors to help keep lending flowing (Table 1). Over 110 countries have sought to buy time for solvent borrowers to withstand the worst effects of the supply and demand shocks induced by the lockdown.

Table 1. Measures taken by main category and subcategories of intervention (as of April 17)

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Figure 1. Financial Sector Support Measures in Response to COVID-19

This prudential line of action operates mostly through a temporary relaxation of certain key regulatory and supervisory requirements, for example on the use of buffers, reporting, or treatment of past-due loans. In most G20 economies, and some non-G20 emerging-market economies with well-developed financial markets, the package also includes clear supervisory guidance and expectations on how banks should effectively and soundly use this new flexibility. The top measures tracked in the prudential category are: credit repayment moratoria (18% of all prudential measures), supporting or facilitating the restructuring of loans (10%), relaxation in the classification and/or provisioning of non-performing assets (NPA), (7% and 6%, respectively), and releasing or deferring existing capital buffers (6%).

The use of buffers and the facilitation of loan restructuring are perfectly aligned with the existing regulatory framework. But other flexibility mechanisms, such as the use of moratoria and the flexibility in the treatment of NPA, might involve regulatory forbearance. This needs to be assessed very carefully and to be aligned with minimum prudential standards. Easing financial conditions and exercising some regulatory forbearance might be necessary as long as conditions remain difficult, though this might have important implications on financial-sector stability in the medium term. These measures need to avoid increasing financial risks, especially in those systems that are already vulnerable. Decisions should be extraordinary, time bound, transparent, and based on rigorous risk assessments. Banks should be expected to produce and disclose reliable, frequent, up-to-date, and comparable information regarding loans that have benefitted from borrower relief measures. Banks must continue to apply the relevant prudential regulatory measures in terms of classification and provisions, especially when the Net Present Value of loans changes as a result of applying relief measures. In countries with pre-existing financial vulnerabilities, including supervisory capacity constraints, reduced buffers and a poor financial safety net, the abuse of regulatory forbearance now can be especially worrying.

The full effect and duration of the COVID-19 crisis is still unknown, and its peak- and second-round effects are still to come in most countries. With indebtedness at record levels, the tight interlinkages between sovereign, financial and corporate sectors may give rise to adverse feedback loops, especially in countries with weaker crisis management and corporate insolvency frameworks. It is crucial to continue strengthening the resilience of the financial sector, while helping mitigate the impact of the crisis, so that it can play its countercyclical role now, and support the economy in the recovery phase.   

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Government

Federal Food Stamps Program Hits Record Costs In 2022

Federal Food Stamps Program Hits Record Costs In 2022

In early January, The Wall Street Journal Editorial Board warned that one peril of a…

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Federal Food Stamps Program Hits Record Costs In 2022

In early January, The Wall Street Journal Editorial Board warned that one peril of a large administrative state is the mischief agencies can get up to when no one is watching.

Specifically, they highlight the overreach of the Agriculture Department, which expanded food-stamp benefits by evading the process for determining benefits and end-running Congressional review.

Exhibit A in the over-reach is the fact that the cost of the federal food stamps program known as the Supplemental Nutrition Assistance Program (SNAP) increased to a record $119.5 billion in 2022, according to data released by the U.S. Department of Agriculture...

Food Stamp costs have literally exploded from $60.3 billion in 2019, the last year before the pandemic, to the record-setting $119.5 billion in 2022.

In 2019, the average monthly per person benefit was $129.83 in 2019, according to the U.S. Department of Agriculture. That increased by 78 percent to $230.88 in 2022.

Even more intriguing is the fact that the number of participants had increased from 35.7 million in 2019 to 41.2 million in 2022...

All of which is a little odd - the number of people on food stamps remains at record highs while the post-COVID-lockdown employment picture has improved dramatically...

Source: Bloomberg

If any of this surprises you, it really shouldn't given that 'you, the people' voted for the welfare state. However, as WSJ chided: "abuse of process doesn’t get much clearer than that."

In its first review of USDA, the GAO skewered Agriculture’s process for having violated the Congressional Review Act, noting that the “2021 [Thrifty Food Plan] meets the definition of a rule under the [Congressional Review Act] and no CRA exception applies. Therefore, the 2021 TFP is subject to the requirement that it be submitted to Congress.” GAO’s second report says “officials made this update without key project management and quality assurance practices in place.”

Abuse of process doesn’t get much clearer than that. The GAO review won’t unwind the increase, which requires action by the USDA. But the GAO report should resonate with taxpayers who don’t like to see the politicization of a process meant to provide nutrition to those in need, not act as a vehicle for partisan agency staffers to impose their agenda without Congressional approval.

All of this undermines transparency and accountability for a program that provided food stamps to some 41 million people in 2021. The Biden Administration is using the cover of the pandemic to expand the entitlement state beyond what Congress authorized.

The question now is, will House Republicans draw attention to this lawlessness and use their power of the purse to stop it to the extent possible with a Democratic Senate.

And don't forget, the US economy is "strong as hell."

Tyler Durden Sat, 01/28/2023 - 09:55

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A Royal Caribbean Cruise Line Adult Favorite Has Not Come Back

The cruise line has almost fully returned to normal after the covid pandemic, but one very popular activity hasn’t been brought back.

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The cruise line has almost fully returned to normal after the covid pandemic, but one very popular activity hasn't been brought back.

In the early days of Royal Caribbean Group's (RCL) - Get Free Report return from its 15-month covid pandemic shutdown, cruising looked a lot different. Ships sailed with limited capacities, masks were required in most indoor areas, and social distancing was a thing.

Keeping people six feet apart made certain aspects of taking a cruise impossible. Some were made easier by the lower passenger counts. For example, all Royal Caribbean Windjammer buffets required reservations to keep the crowds down, but in practice that system was generally not needed because capacities were never reached.

Dance parties and nightclub-style events had to be held on the pool decks or in larger spaces, and shows in the big theaters left open seats between parties traveling together. In most cases, accommodations were made and events more or less happened in a sort of normal fashion.

A few very popular events were not possible, however, in an environment where keeping six feet between passengers was a goal. Two of those events -- the first night balloon drop and the adult "Crazy Quest" game show -- simply did not work with social-distancing requirements.

One of those popular events has now made its comeback while the second appears to still be missing (aside from a few one-off appearances).

TheStreet

The Quest Is Still Mostly Missing

In late November, Royal Caribbean's adult scavenger hunt, "The Quest," (sometimes known as "Crazy Quest") began appearing on select sailings. And at the time it appeared like it was coming back across the fleet: A number of people posted about the return of the interactive adult game show in an unofficial Royal Caribbean Facebook group.

It first appeared during a Wonder of the Seas transatlantic sailing.

Since, then its appearances continue to be spotty and it has not returned on a fleetwide basis. This might not be due to any covid-related issues directly, but covid may play a role.

On some ships, Studio B, which hosts "The Quest," has been used for show rehearsals. That has been more of an issue with the trouble Royal Caribbean has had in getting new crew members onboard. And while that staffing issue has been improving, some shows may not have had full complements of performers, so using the space for rehearsal has been a continuing need.

In addition, while covid rules have gone away, covid has not, and ill cast members may force the need for more rehearsals.

Royal Caribbean has not publicly commented on when (or whether) "The Quest" will make a full comeback

Royal Caribbean Balloon Drops Are Back   

Before the pandemic, Royal Caribbean kicked off many of its cruises with a balloon drop on the Royal Promenade. That went away because it forced people to cluster as music was performed and, at midnight, balloons fell from the ceiling.

Now, the cruise line has brought back the balloon drop, albeit with a twist. The drop itself is appearing on activity schedules for upcoming Royal Caribbean cruises. Immediately after it, however, the cruise line has added something new: "The Big Recycle Balloon Pickup."

Most of the dropped balloons get popped during the drop. Previously, crewmembers picked up the used balloons. Now, the cruise line has made it a "fun" passenger activity.

"Get environmentally friendly as you help us gather our 100% biodegradable balloons in recycle baskets," the cruise line shared in its app. 

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What’s Still Missing on Royal Caribbean Cruises Post Covid

The cruise line has almost fully returned to normal after the covid pandemic, but one very popular activity hasn’t been brought back.

Published

on

The cruise line has almost fully returned to normal after the covid pandemic, but one very popular activity hasn't been brought back.

In the early days of Royal Caribbean Group's (RCL) - Get Free Report return from its 15-month covid pandemic shutdown, cruising looked a lot different. Ships sailed with limited capacities, masks were required in most indoor areas, and social distancing was a thing.

Keeping people six feet apart made certain aspects of taking a cruise impossible. Some were made easier by the lower passenger counts. For example, all Royal Caribbean Windjammer buffets required reservations to keep the crowds down, but in practice that system was generally not needed because capacities were never reached.

Dance parties and nightclub-style events had to be held on the pool decks or in larger spaces, and shows in the big theaters left open seats between parties traveling together. In most cases, accommodations were made and events more or less happened in a sort of normal fashion.

A few very popular events were not possible, however, in an environment where keeping six feet between passengers was a goal. Two of those events -- the first night balloon drop and the adult "Crazy Quest" game show -- simply did not work with social-distancing requirements.

One of those popular events has now made its comeback while the second appears to still be missing (aside from a few one-off appearances).

TheStreet

The Quest Is Still Mostly Missing

In late November, Royal Caribbean's adult scavenger hunt, "The Quest," (sometimes known as "Crazy Quest") began appearing on select sailings. And at the time it appeared like it was coming back across the fleet: A number of people posted about the return of the interactive adult game show in an unofficial Royal Caribbean Facebook group.

It first appeared during a Wonder of the Seas transatlantic sailing.

Since, then its appearances continue to be spotty and it has not returned on a fleetwide basis. This might not be due to any covid-related issues directly, but covid may play a role.

On some ships, Studio B, which hosts "The Quest," has been used for show rehearsals. That has been more of an issue with the trouble Royal Caribbean has had in getting new crew members onboard. And while that staffing issue has been improving, some shows may not have had full complements of performers, so using the space for rehearsal has been a continuing need.

In addition, while covid rules have gone away, covid has not, and ill cast members may force the need for more rehearsals.

Royal Caribbean has not publicly commented on when (or whether) "The Quest" will make a full comeback

Royal Caribbean Balloon Drops Are Back   

Before the pandemic, Royal Caribbean kicked off many of its cruises with a balloon drop on the Royal Promenade. That went away because it forced people to cluster as music was performed and, at midnight, balloons fell from the ceiling.

Now, the cruise line has brought back the balloon drop, albeit with a twist. The drop itself is appearing on activity schedules for upcoming Royal Caribbean cruises. Immediately after it, however, the cruise line has added something new: "The Big Recycle Balloon Pickup."

Most of the dropped balloons get popped during the drop. Previously, crewmembers picked up the used balloons. Now, the cruise line has made it a "fun" passenger activity.

"Get environmentally friendly as you help us gather our 100% biodegradable balloons in recycle baskets," the cruise line shared in its app. 

Read More

Continue Reading

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