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Global banking regulators say that, although the Covid-19 pandemic may have evolved, banks should use their capital and liquidity buffers to support economic growth.

Following meetings on June 10 and 16, the Basel Committee on Banking Supervision issued a statement declaring that the pandemic has “entered a new phase.”

“The global economic outlook remains uncertain,” it said.

In the current environment, banks and their regulators, “must remain vigilant to the risks and vulnerabilities stemming from the pandemic to ensure that the global banking system remains financially and operationally resilient,” the group said.

The steps taken in the initial stages of the crisis — including delaying certain provisions of the global capital rules, providing more flexibility on the accounting treatment of credit losses and delaying new derivatives requirements — have helped mitigate short-term financial stability risks, the Basel Committee said.

“Using capital resources to support the real economy and absorb losses should take priority at present,” the group stated.

“The Committee views a measured drawdown of banks’ Basel III buffers to meet these objectives as both anticipated and appropriate in the current period of stress,” it added.

The group also said that regulators should provide banks with sufficient time to restore their buffers when economic and market conditions allow it.

The committee said it will continue to monitor the risks to the global banking system from Covid-19 “and will pursue additional measures if needed.”

The Basel Committee said that final revisions to its credit valuation adjustment risk framework will be published in the weeks ahead. The committee added that a proposed amendment to the treatment of non-performing loan securitizations will be issued for consultation next week and that it expects banks to be prepared to make the transition away from London inter-bank offered rate to new financial benchmarks over the next couple of years.