01 Safeguarding critical functions

Crisis playbook & action plans

The financial system plays a major role in navigating the COVID-19 crisis, not only as a contributor to countries’ gross domestic product, but also as an enabler of economic activity.

Supervisors will have to identify critical functions provided by the financial sector and define measures to safeguard them in the short term. Our work intends to provide guidance not only applicable to the current situation, but also to future events that could hamper normal functioning of the financial sector, such as natural disasters.

Based on a top-down assessment of demand and supply under stress, critical functions identified in Latin America and the Caribbean include cash services, retail payment services, remittances, and short-term business lending, alongside to securities clearing & settlement and wholesale payments.

• Cash services: Continue to meet elevated demand for cash, ensuring uninterrupted access and distribution.
• Payment services:Ensure functioning of e-payment services, reduce hurdles to access, and establish alternative to cash for redundancy and efficiency considerations.
• Remittances:Safeguard flow of funds to the underbanked.
• Short term business lending:Safeguard availability of short-term credit in the economy, support implementation of government support programs and proactively manage credit risk
• Securities clearing & settlement:Ensure adequacy of contingency plans and sufficient liquidity in the system
• Wholesale payments:Ensure adequacy of contingency plans and fulfilment of critical operations.

The report sets the ground for discussion on medium term actions that could foster resilience, inclusion and innovation of the financial sector in Latin America and the Caribbean.