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The COVID-19 crisis and banking system resilience

This paper outlines the findings of a simulation analysis aimed at assessing the extent of the potential rise in NPLs depending on the severity of the COVID-19 crisis on the global economic environment, and taking into consideration assumptions under extensive monetary and fiscal support versus a scenario without continued support measures in keeping with conditions that prevailed in the past crisis. The paper also investigates the subsequent implications for bank capital and discusses whether policy responses may be needed to clean balance sheets.[…]