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FRAs Initiatives and Precautionary Measures to Curb the Spread of the Coronavirus (Covid-19) Pandemic and Alleviate its Impacts on Stakeholders of Non-Banking Financial Services

 

 Over the course of the history, the world faced a plethora of financial and economic crises starting from the Great Depression of 1929 to the stock market crash known as Black Monday on 19 October 1987, which led to capital outflow from the worlds largest bourses. Thereafter, Asian financial crisis of the so-called Asian Tigers in 1997, which initially triggered in Thailand, then extended to the rest of Southeast Asian countries and their trade partners. By the end of the previous decade, the global economy passed through another turmoil the global financial crisis in 2008 and the repercussions of European sovereign debt crisis in 2009.

Coinciding with each global crisis, many researchers and economists are aggressively studying its economic impacts, namely diminishing economic growth rates, global slowdown and stagnation, economic recession, shrinking of many jobs and weak incomes of individuals. Consequently, countries and international financial institutions offer huge stimulus packages to stimulate economic activities and support companies to raise utilization rate and pump further funds in national economies to step up growth rates.

In this respect, the coronavirus pandemic, which represents an unprecedented health disaster and a threat to all societies whether poor or rich, developing or developed, has taken a painful toll on societies. The novel virus has propelled countries to enforce social distancing and impose complete or partial quarantine to combat its spread. Additionally, countries have shut down many economic activities to reduce any large gatherings. This in turn suspended a raft of services and productive activities and undermined many micro, small, and medium-sized enterprises (MSMEs). All of the above mentioned paint a uniform picture that the world would plunge into an inevitable recession with severe financial losses.

The Egyptian government has been fully aware that we are facing a pandemic that would have grave economic and social impacts on the Egyptian society. Accordingly, it started early in taking a patchwork of precautionary measures to staunch the spread of the respiratory disease. In alignment with the Egyptian governments efforts, the state-run entities have launched a host of initiatives to alleviate economic fallouts from the coronavirus pandemic. As part of these endeavors, the Financial Regulatory Authoritys (FRA) Board of Directors, in an emergency meeting held on 22 March 2020, approved to provide a financial support worth EGP 250 million to blunt coronavirus-induced economic effects, especially for the most vulnerable groups who are extremely affected by the economic impacts of the coronavirus.

Moreover, FRA has taken a series of initiatives to alleviate the virus impact on stakeholders of non-banking financial services, (through two different paths) as follows:

 I. Introducing a raft of initiatives to facilitate procedures for stakeholders and safeguard soundness and stability of the non-banking financial services, including:

 a. The Capital Market and the Egyptian Exchange (EGX).

 b. Insurance Sector.

c. Mortgage Finance, Financial Leasing, and Factoring Sectors.

d. Microfinance Sector.

II. Taking precautionary measures to combat the outbreak of Covid-19 virus among FRA staff and facilitate dealing with citizens at the Authoritys headquarters.

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