Global policymakers’ effort to enhance oversight of financial markets by improving data collection, which was launched in the wake of the 2008 financial crisis, is being disrupted by the current Covid-19 crisis.

According to a new report from the Financial Stability Board (FSB) and the International Monetary Fund (IMF), the pandemic has created “significant challenges” for the ongoing effort to improve oversight of the global financial system — a project known as the G20 Data Gaps Initiative (DGI).

The primary objective of the DGI is to ensure that policymakers have access to reliable and timely statistics, enabling them to better monitor for systemic risk, and to assess vulnerabilities, interconnections, and potential spillovers in the financial system.

The report said that lockdowns in response to the pandemic have hampered data collection and required a shift in resources to other priorities, which is disrupting that work.

For example, the temporary closure of some businesses has meant that “many data sources have remained inadequate or incomplete due to the difficulties of conducting business and household surveys or collecting additional data,” it said.

Additionally, a shift to remote working and changes in policymakers’ priorities has negatively affected the reform efforts in many economies, the report added.

The pandemic has also created new data needs, “which resulted in resource reprioritization and the postponement of planned actions.”

Given the challenges created by Covid-19, participating countries have agreed to extend their work on the DGI by six months to December 2021.

Looking ahead, the report suggested that the pandemic has also revealed the need for further global cooperation on market data.

Policymakers’ appetite for more current, granular data has only grown during the Covid-19 crisis, the report said.

“Accurate and timely data are crucial for informing policy decisions, especially during a crisis,” it noted.

Emerging data needs include statistics on the economic impact of the pandemic, climate change, and sustainable economic development and finance, among others, the report said.

Additionally, policymakers could look to adopt alternative data sources, including private sources, administrative records, and big data.

The report further suggested that a new international collaboration could help address these emerging data needs, noting that a framework for a new effort could be sketched out in 2021 and presented to the G20 next fall.

Explain FIVE (5) course of actions to mitigate risks in the financial sector during this crisis.