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COVID-19 Crisis Poses Threat to Financial Stability

The article discusses the impact of the COVID-19 pandemic on the global financial system and the actions taken by central banks to mitigate potential risks. The pandemic has resulted in a sharp slowdown in economic activity, leading to concerns about solvency rather than liquidity. Central banks have played a crucial role in safeguarding the stability of global financial markets and maintaining the flow of credit to the economy. However, this crisis is not just about liquidity but also about solvency, as large segments of the global economy have come to a complete stop. Fiscal policy has a vital role to play in cushioning the impact of the pandemic and supporting vulnerable countries. The article highlights the importance of close, continuous international coordination to restore market confidence and contain financial stability risks.
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