Second, the banking sector’s resilience during the crisis has benefited crucially from the decisive economic policy response (monetary, fiscal and prudential), which has substantially alleviated the impact of the crisis on the financial position of households and non-financial corporations, thus lessening the effect on financial institutions’ balance sheet quality. The decisions taken by macro- and microprudential authorities have also allowed the banks’ capital positions to improve during the crisis, and have authorised the use of buffers to help smooth the provision of financing to other economic agents, as a complement to the fiscal and monetary measures. 1  Although banking was among the hardest-hit sectors – in terms of stock market valuations – during the initial stages of the crisis, its share price valuations have recovered significantly on international financial markets after the development of vaccines was announced in November 2020. This reflects the fact that, thus far, the crisis has largely been prevented from developing a relevant financial component. Some examples will suffice to illustrate the banking sector’s resilience during the crisis and the role played by economic policies in maintaining it. 2  The resilience and role of the banking sector during the crisis  First, let us look at the indicator reflecting credit developments. For the first time since the global financial crisis, the volume of bank lending to the resident private sector in Spain increased in 2020 (by 3.5%).

This is achieved as risks are transferred to parties that can best manage those risks. Hence, the public sector can provide the regulatory risk guarantees and incentives to ensure adequate demand, whilst the private sector will raise financing as well as technical expertise. This model was successfully implemented for the biggest highway concessionaire in Malaysia. PLUS operates and maintains 973km of expressways in Peninsular Malaysia, stretching from the border of Thailand to Singapore and linking all major cities on the west coast of Peninsular Malaysia. Financing for infrastructure development is equally important as this has implications on the fiscal position. To structure the most competitive and efficient financing for each stage of the infrastructure project schedule, several options can be considered – including direct funding from the budget, the issuance of long-term Government bonds, the issuance of long-term Government-guaranteed bonds, the securitization of works completed, and the issuance of long-term bonds backed by the Government’s undertaking to make deferred payments. The actual funding mix adopted needs to be based on the Government’s fiscal position and on economic conditions. By adopting a mix of strategies over the overall duration of the project, the Government can optimise on the funding costs. Another major area of financing that has been a challenge both in the developed and emerging economies is for health care. The structure of healthcare provision requires a balanced socialised element to avoid both the market failure of a largely privately driven system (e.g. as experienced in US) and the inefficiencies of fully public systems (e.g.