Individual IMF Video Case Analysis 3: Global Financial Stability Report Essay Sample

Individual IMF Video Case Analysis 3: Global Financial Stability Report
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Watch the video Global Financial Stability Report, at the International Monetary Fund (IMF), then provide a summary of what was discussed in the video, the main topics, and your opinions about what was presented/discussed. Do you agree/disagree with the assertions that were made? Why, or why not? Your summary and opinions should contain a minimum of 500 words.
The coronavirus (COVID-19) pandemic has caused an economic shock in the global economy, where economic and financial stability and the banking industry are some of the most affected (IMF, 2020). Global economic contraction in 2020 is closely linked to measures adopted to contain the spread of coronavirus. Nonbanking lenders also increase risk in the financial and capital markets. As part of improving banking resilience, reducing and eliminating dividends and buybacks in the short-term are suggested as viable options. When the economies improve, then banks can pay out the dividends or pay for the share repurchase. At the same time, they are protected from further weakening during a time of negative economic growth (IMF, 2020). The case for this is that it would reduce banking exposure when rising debt default, market volatility, and lower profits in the banking sector.
The video suggests that cost-cutting and bank restructuring may be required to improve resilience from covid-19 related economic shock. I agree with this as banks are exposed to high defaults, albeit at a smaller scale than during the 2007/ 2008 global financial crisis. Nonetheless, prior regulations and policies adopted after the crisis strengthened the banking industry as higher capital and liquidity levels were required. Highly leveraged households and businesses may pose a problem for the global financial markets, especially in the frontier and emerging mar...