The international monetary system remains vulnerable to volatility and contagion, such as the recent financial volatility as a result of COVID-19, as well as risks from increased leverage (see chapters I and III.E). Whether these have systemic stability implications depends on the nature of international financial linkages and the timeliness and effectiveness of policy responses.
The financial reforms undertaken in response to the 2008 financial crisis have been instrumental in bolstering the safety of the banking system and addressing the risks, channels and mechanisms related to the crisis. Regulatory and supervisory bodies should lead by example in promoting the timely, full and consistent implementation of remaining reforms. This will support a level playing field and avoid regulatory arbitrage.