CAN FINANCIAL REGULATION HELP TO REDUCE PROCYCLICALITY IN THE COVID-19 CRISIS

Klaas KNOT Président, Banque centrale des Pays-Bas (DeNederlandscheBank) - Vice-président, Conseil de stabilité financière

One of the aims of financial regulation is to reduce procylicality. It should help to prevent the financial system from amplifying economic shocks or becoming a source of shocks itself. Therefore, financial regulation was revised substantially after the global financial crisis. The Covid-19 crisis poses the first serious test for this new framework. This article reviews whether regulation has helped to reduce procyclicality this time, and draws lessons for the future.