The effects triggered by the spread of COVID-19 and its economic impact will be severe and long-lasting. The OECD estimates that the COVID-19 Crisis will directly affect sectors amounting to up to one-third of Gross Domestic Product (GDP) in the major developed economies. For each month of containment, there will be a loss of two percentage points in annual GDP growth.1 Today, we face economic upheaval potentially graver than the Great Financial Crisis. Pressure on the financial system is growing and, clearly, this is a “whateverit-takes” moment for fiscal and monetary policy.
During this crisis, policymakers have reacted swiftly to inject liquidity into the economy, but ultimately, when solvency is in question, the transformational capacity of banks can be impaired. Equity is needed to buffer exogenous shocks and will be needed more than ever so that public equity markets can, to the best of their abilities, help companies weather the crisis and finance their post-crisis growth. Exchanges facilitate this capital formation, allowing raising capital and trading and supporting risk management, in an orderly and transparent manner. They make possible the access of borrowers to liquid funds, reduce their capital costs, and diversify their funding sources whilst offering investment opportunities and investor protection.
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