Monetary and financial measures in response to COVID-19 and their impact on the Dominican Republic

What it is about

Main monetary and financial measures taken by the authorities in Europe and Latin America, with emphasis on the Dominican Republic up to April 2020, to manage the crisis arising from the COVID-19 pandemic.

It includes a brief review of expectations and of how to manage the resulting risks.

Session summary

The Club’s first webinar, with three views of the COVID-19 crisis. The first speaker, president of Spain’s Risk Management Club, describes the pandemic as a triple shock of demand, supply and finance, with examples of the collapse in activity and confidence, and reviews the responses in Europe: central bank liquidity injections, state guarantee lines, support for companies and households, and flexibility in applying accounting provisioning rules and regulatory requirements. The second, with experience at the body that groups the Americas’ supervisors, describes how measures in the region backed the real sector, banks and non-bank institutions with liquidity, grace periods, changes in reserve requirements, suspended dividends and provisioning flexibility, and the cybersecurity and internal-control risks of remote work.

The third, president of the Club in the Dominican Republic, summarizes the country’s monetary and financial measures: release of reserve-requirement funds, liquidity provision to institutions and financing for micro, small and medium-sized enterprises through the state bank, cuts in policy rates, regulatory facilities for restructurings and loan classification, elimination of fees, and measures by the institutions themselves with their clients. He presents projections from international bodies and recommends that institutions identify vulnerable sectors, watch delinquency and coverage, strengthen provisions, mind dividend policy and capital, run stress tests and adjust risk appetite.

Topics covered

• The pandemic as a demand, supply and financial shock
• Responses of central banks, governments and supervisors in Europe
• Measures in Latin America and cybersecurity and internal-control risks
• Monetary and financial measures in the Dominican Republic
• Liquidity, reserve requirements, rates and financing for micro, small and medium enterprises
• Regulatory facilities for restructurings, provisions and loan classification
• Recommendations for institutions: capital, provisions, stress and risk appetite