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Financial Services Providers Interventions to mitigate the Impact of COVID-19

Financial service providers can play a critical role in mitigating the negative impact of COVID-19 and contribute to stabilizing of the economy. The SDGC/A has prepared this communiqué on how financial service providers can mitigate the impact of the epidemic with supportive policy measures introduced by central banks. This communiqué draws lessons from the experience of China, Italy and some African countries. As the situation is very fluid and the degree of uncertainty is high, central banks and financial service providers in Africa should continue to follow developments and regularly assess the possible impact of the pandemic and take the necessary measures to mitigate the negative impact of the pandemic.

Financial Service Providers

  1. Take proactive measures to protect staff and customers against COVID-19. Regularly sanitize banking halls and all relevant banking equipment; provide front-line staff with protective equipment and cooperate with key health agencies.
  2. Support government effort to enhance bank account ownership by all people and encourage widespread use of digital channels wherever possible with appropriate safeguards. Some branches can still be open as necessary to meet special needs of customers.
  3. Review pricing on selected services and increase transaction and wallet size limits as appropriate to facilitate money transfer. Among others, reduce or waive charges for services like person to person transactions, balance enquiries, payment services for utilities and cost of loan restructuring. This applies also to mobile network operators.
  4. Provide clear guidance and the right support to address issues (like conditions of loan restructuring, refinancing etc.) to be raised by customers who are dealing with financial distress and uncertainty due to the pandemic.
  5. Be vigilant about liquidity measures; upgrade stress testing frameworks and risk models.
  6. Encourage banking associations to play a role in cross fertilizing best practices among banks in supporting businesses affected by the epidemic.

Central Bankers

    1. Advise the public against panic; direct financial service providers under its supervision to continue providing its services, as necessary, and put in place appropriate measures that help to stop spread of the virus.
    2. Engage mobile network operators and financial service providers to reduce fees on services including digital payment charges.
    3. Encourage and support National Development Banks to effectively play a role in counteracting the pro-cyclical behavior of private financing.
    4. Review the monetary policy rate as appropriate to ease access to credit to businesses affected by the epidemic.
    5. Review treasury bills rediscounting window as necessary and facilitate way of buying back bonds at market rate.
    6. Introduce stimulus packages including liquidity assistance to the financial system to support affected businesses by pandemic.
    7. Temporarily relax rules for banks as appropriate including conservation buffers, liquidity coverage ratio and reserve requirements and restructure loans of borrowers temporarily affected by the pandemic on a case by case basis in a sound manner and without compromising financial stability.
    8. Take measures and intervene in the foreign exchange market to smoothen out excess volatility.

 

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