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Covid-19, One Year Later

Capital Markets Entering Uncharted Waters

This research paper constitutes the second edition of our work on the impact of the COVID-19 crisis for capital markets and the investment management industry. It is based on a survey of the global CFA Institute membership, conducted in March 2021.

COVID-19, One Year Later: Capital Markets Entering Uncharted Waters

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Governments and central banks in advanced economies have implemented robust and comprehensive plans and have taken a coordinated approach to fiscal and monetary stimulus, which was a novel and potentially controversial stance on central bank independence.

This influx of liquidity into the system clearly tamed the risks of market dislocation and helped bridge the gap—at least partially—for market participants, workers, regulators, policy makers, and investors directly affected by the economic shutdown measures.

Concerns are rising, however, as to the eventual unintended consequences of this liquidity infusion by central banks and government relief programmes, including questions regarding a multispeed recovery, inflationary pressures, addiction to monetary stimulus, taxes, emerging regulatory risks, and the actual financial health of corporates.

These considerations formed the framework for our second research paper on the subject of the COVID-19 crisis. In particular, we sought to explore the socioeconomic consequences of the crisis and that of the stimulus measures as they may be having distortion effects. As part of this effort, we have tried to focus on the “S” in environmental, social, and governance (ESG) and to extract some high-level observations on societal developments at large, including how the various socioeconomic categories may have experienced the crisis differently.


Summary of Findings