Managing the effects of the crisis on credit risks and capital levels has been the top priority for banks. Strong credit risk management is crucial to avoid the risk of a cliff edge and procyclicality. As we look longingly towards a future beyond COVID-19, it is worth reflecting on some lessons learned.
This report looks into COVID-19 implications for the credit risk environment and how banks are responding to the challenges through such a period of stress. As the ECB itself notes, “inaction today will cost us tomorrow”. Looking ahead, further steps are expected to be taken from the industry in order to cope with the COVID-19 impact on credit risk.
Read our latest report to understand how regulators and supervisors have enabled banks to continue providing credit to many households and businesses throughout the pandemic and the actions banks may wish to consider in the mid to long-term as we navigate from crisis to the new normal.