Top 10 coronavirus initiatives by governments and regulators
As coronavirus continues to grip the world’s economies, governments and financial regulators have tried to minimise the damage done to individuals and businesses by rolling out various aid packages and funding schemes, in addition to relaxing or implementing new rules to help weather the storm.
Here are FinTech Futures’ top ten picks from the news we’ve brought to you this past month:
Perhaps the most fintech-specific aid issued by a regulator so far, the Monetary Authority of Singapore (MAS) unveiled its SGD 125 million ($87.8 million) coronavirus care package to help country’s financial and fintech sectors.
It includes wage subsidies for employees, help with rental fees in specific fintech coworking spaces, and a ‘Digital Acceleration Grant’ which is designed in part to help fintechs invest more in their digital products.
The historically unprecedented move has seen the Fed inject roughly $2.3 trillion into various lending programmes which will help support the economy.
Through its ‘Main Street’ lending facility, the Fed is buying $600 billion in loans and expanding its corporate credit programmes and Term Asset Loan Facility (TALF) to support $850 billion in credit.
The Fed will then also be offering up to $500 billion in loans to states and municipalities.
Japanese Prime Minister Shinzo Abe has pledged a record JPY 108 trillion ($1 trillion) stimulus package to help small businesses whose revenues have more than halved due to the coronavirus pandemic, promising up to JPY 2 million ($18,350) to each one.
Abe says direct fiscal spending in the package would amount to JPY 39 trillion, more than double the amount Japan spent following the collapse of Lehman Brothers in 2008.
Challenger bank for small and medium-sized enterprises (SMEs) Judo has become the first recipient of capital from the government’s AUD 2 billion SME funding scheme, distributed by the Australian Office of Financial Management (AOFM).
It is also a recipient of the government’s AUD 15 billion Structured Finance Support Fund (SFSF), designed specifically for funding markets hit by the coronavirus.
The Federal Reserve has teamed up with the central banks of England, Canada, Japan, Europe and Switzerland to tackle market instability by offering them cheap dollar financing.
By lowering the price on the US dollar liquidity swap arrangements by 25 basis points, those central banks outside the US can provide better liquidity on the US dollar.
This makes it easier for the central banks to provide dollars to financial institutions facing difficulties in credit markets.
The People’s Bank of China (PBOC) has cut the interest rate it pays banks to park funds with the central bank to 0.35% from 0.72%, its first change in 11 years.
Whilst “this should in theory boost lending” according to ING Bank chief Greater China economist Iris Pang, there is a worry that banks may not pay heed to the government’s repeated calls to lend more aggressively to small businesses, because it means shouldering a potentially higher default risk.
UK regulator the Financial Conduct Authority (FCA) has proposed a series of new measures to help households cope with coronavirus, including a three-month freeze on loan and credit card debt.
Consumers with an existing arranged overdraft would also be able to request from their provider that up to £500, on their main personal current account, is provided at 0% for up to three months.
The new proposals will sit alongside relief offered by the government for mortgage holders, furloughed staff, and the self-employed.
Many start-ups have called for alternative aid, as a majority are excluded from current government loan packages due to their lack of “viability” as businesses – largely down to the fact many are still not making a profit.
Officials and investors have told the Financial Times that the Treasury is now considering proposals about how best to support the country’s start-ups during coronavirus.
One option being considered is to offer convertible loans to be repaid by the businesses after the crisis, or to be converted into equity stakes owned by the state.
The European Central Bank (ECB) has warned banks to exercise “extreme moderation” in doling themselves out big bonuses this year, threatening to act against them if they do not.
“In the capital conservation mentality that we are trying to instil in banks, I think we will expect them to exercise extreme moderation on variable remuneration,” said the ECB’s supervisory board chair Andrea Enria.
The ECB has also called for a halt on dividend pay outs by banks to their shareholders. Whilst some banks, namely UniCredit and Societe Generale, had already announced the halt of their 2019 dividend pay outs, Swiss banking giants UBS and Credit Suisse have pushed ahead regardless of the ECB’s calls against it.
Not strictly a government or a regulator, the Emerging Payments Association (EPA) has acted a lot like a regulator in this instance as it pledges to work with card schemes “to consider relaxing the thresholds and policies in relation to chargebacks and fraud levels”.
In a bid to help businesses struggling with the volume of refunds during the coronavirus, the EPA will ask the card schemes to work with payment companies to put in place bank bonds or trust agreements to mitigate additional cash collateral.