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Vaccines Inoculate Markets, but Policy Support Is Still Needed
The Global Financial Stability Update at a Glance
recovery and lifted risk asset prices, despite rising COVID-19 cases and
softening economic activity in late 2020.
recovery remain predicated on continued monetary and fiscal policy support.
Inequitable distribution of vaccines risks exacerbating financial
vulnerabilities, especially for frontier market economies.
for emerging market economies facing large rollover needs in 2021.
pressures may resurface in the near future, especially in riskier segments
of credit markets and sectors hit hard by the pandemic. Credit concerns and
profitability challenges in the low-interest-rate environment may weigh on
banks’ ability and willingness to lend in the future.
recovery takes hold: under-delivery may jeopardize the healing of the
global economy. However, with investors betting on a persistent policy
backstop and a sense of complacency permeating markets as asset valuations
rise further, policymakers should be cognizant of the risks of a market
correction.
policymakers should address rising vulnerabilities to avoid putting growth
at risk in the medium term.
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