Microfinance and COVID-19: Principles for Regulatory Response
Governments across the globe have taken extraordinary steps to contain the COVID-19 outbreak. Although necessary, public health responses such as lockdowns have imposed serious costs on the real economy and the financial sector. As a result, further policy steps have proven necessary, both within and beyond the financial sector, to mitigate the impacts of the pandemic on businesses and ordinary people. In a previous COVID-19 Briefing (CGAP 2020a) CGAP proposed five guiding principles for regulators to consider. This Briefing applies each principle to country contexts, and specifically addresses what each principle means for regulatory responses to the COVID-19 crisis.
The paper spells out what the principles mean for regulatory responses to the COVID-19 crisis. It also aims to:
- Illustrate how specific measures may be guided and assessed in light of the five principles.
- Identify trade-offs authorities may face in applying the principles.
- Assess the extent to which these microfinance-specific principles are consistent with general crisis response guidance.
- Draw lessons relevant to the design of responses to COVID-19 and other crises that may arise in the future.