COVID-19 is a global health pandemic that is affecting people and businesses, and is having a significant impact on the economy and on financial markets.
Despite the volatilityVolatility The rate at which the price of a security increases or decreases for a given set of returns. A stock price that changes quickly and by a lot is more volatile. Volatility can be measured using standard deviation and beta.+ read full definition in the capital marketsCapital markets Where people buy and sell investments.+ read full definition, it is important for markets, equityEquity Two meanings: 1. The part of investment you have paid for in cash. Example: you may have equity in a home or a business. 2. Investments in the stock market. Example: equity mutual funds.+ read full definition, debtDebt Money that you have borrowed. You must repay the loan, with interest, by a set date.+ read full definition and credit, to continue to operate fairly and efficiently. Keeping all types of markets open and functional supports the efforts of the real economy in dealing with the COVID-19 crisis.
Businesses underpin our economy and society by providing employment and creating growth and prosperity. Capital markets play a vital role providing finance to businesses and will aid the recovery.
It is important that financial markets remain open as they perform several essential functions:
- Enabling businesses to access capital,
- Allowing investors to investInvest To use money for the purpose of making more money by making an investment. Often involves risk.+ read full definition and access their savings,
- Facilitating the management and hedging of risk,
- Providing price discovery by absorbing information about companies, our economies, government actions and other events, and
- Maintaining confidence in our capital markets.
In addition, the continued flow of capital and orderly functioning of capital markets reduces the possibility that the external shock to our economy resulting from COVID-19 will transition to any systemic financial risk.
Securities regulators are ensuring that markets remain open and functional throughout this difficult period. This includes a focus on the operational and financial resilience of market infrastructures, the operational capacity of market users, and the continued flow of information to these markets.
Learn more about how securities regulators internationally are coordinating their responses to COVID-19 through the International Organization of Securities Commissions (IOSCO).