The coronavirus pandemic has created a fragile U.S. financial system that could last “some time,” the Federal Reserve said Friday.
“The strains on households and business balance sheets from the economic and financial shocks since March will likely create fragilities that last for some time,” the central bank said in its latest semi-annual report on the financial sector.
As a result, banks and other financial institutions “may experience strains as a result.”
Fed officials said how long those circumstances would last depended on the speed of the economic recovery.
Fed Chairman Jerome Powell said earlier this week that a lengthy downturn could turn liquidity problems into solvency issues.
“The strains on households and business balance sheets from the economic and financial shocks since March will likely create fragilities that last for some time,” the central bank said in its latest semi-annual report on the financial sector.
As a result, banks and other financial institutions “may experience strains as a result.”
Fed officials said how long those circumstances would last depended on the speed of the economic recovery.
Fed Chairman Jerome Powell said earlier this week that a lengthy downturn could turn liquidity problems into solvency issues.