In their meeting in Busan earlier this month, Finance Ministers and Central Bank Governors of the G20 have “acknowledged a need for national, regional and multilateral efforts to deal with capital volatility”. A Financial Safety Net Experts Group has been set up to work on the issue. The reform of financial regulation The financial crisis as taught us some very hard lessons. While there are many causes to the crisis, it is clear that it forces us to reconsider the way we regulate and supervise the financial system. That is what we have been doing since the November 2008 G20 meeting. We entered this crisis with many unregulated entities playing a major role in the financial system. There were, therefore, huge “black holes”, including what has been called a “shadow banking system” where most of the excesses of securitisation took place. The G20 has fostered coordinated efforts by industrialized and emerging countries alike to bring most important financial actors under the umbrella of supervision, with rating agencies and hedge funds receiving a larger degree of attention. Beyond these actors, the G20 and the Financial Stability Board (FSB) in particular have been instrumental in efforts aimed at enlarging the scope of financial regulation to make sure that the systemic importance and interconnectedness of institutions, markets, instruments no longer escape our vigilance. Naturally, the necessary reform of OTC derivatives markets has gained traction and the G20 has set a very clear roadmap on these matters.

I have never previously experienced such rapid change, despite this being the third major economic crisis in Sweden that I have been involved in. The Riksbank is tracking indicators and also interviewing more companies than normal in order to get an idea of how the situation is changing from day to day and from week to week. What is beyond a shadow of a doubt, however, is that many in society are struggling right now. My thoughts are obviously with all the country’s fantastic health workers who are on the front line. On a personal level, many are also struggling 1  https://www.riksbank.se/en-gb/press-and-published/notices-and-press-releases/press-releases/2020/ingvesand-breman-at-riksdag-committee-on-finance-the-riksbank-is-prepared-to-act/ 2 https://www.riksbank.se/en-gb/press-and-published/notices-and-press-releases/press-releases/2020/the-riksbanks-business-surveyeverything-has-changed-in-two-weeks/  1 [5]  with uncertainty and anxiety about future developments. Not only about the spread of the virus and concern for the health of loved ones, but also worrying about possible unemployment and losing their life’s work when parts of the economy close down. People suffer in economic crises and when bankruptcies and unemployment increase sharply, there will be psychosocial consequences. Make no mistake. And it takes time for the memories to fade. The underlying causes of a crisis can differ, but regardless of them, there will almost always be problems with credit supply in the economy – the financial lifeblood grinds to a halt. If demand for company products and services falls sharply, revenues decrease. Companies then find it more difficult to pay wages, rents and interest on their loans, for example.