European Union: Publication of Financial Sector Assessment Program Documentation—Technical Note on Stress Testing of Banks
IMF Staff Country Reports, March 15, 2013
Source details
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- European Union: Publication of Financial Sector Assessment Program Documentation—Technical Note on Stress Testing of Banks
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Bibliographic details
- Published: March 15, 2013
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781475533408.002
Summary
- Publication date: March 15, 2013
- This article summarizes the European Union’s stress testing exercises and future priorities.
- The 2011 solvency stress testing was marked by methodology and data.
- The exercise forced banks to increase the quality and quantity of capitalization.
- The test raised many controversial issues, but the benefits of this bold approach overshadow the risks.
- Several stress testing exercises have filled the pages of literature; an additional stress test is reviewed here.
Major findings and observations
- 2011 solvency stress testing:
- Marked by methodology and data challenges.
- Resulted in banks increasing both the quality and quantity of capitalization.
- Presented controversial issues alongside important benefits.
- The article situates the 2011 exercise within a broader set of stress testing exercises for the European Union and reviews an additional stress test.
Thematic coverage and subjects
- Subjects listed:
- Banking
- External balance assessment (EBA)
- External position
- Financial sector policy and analysis
- Financial statements
- Liquidity stress testing
- Public financial management (PFM)
- Solvency stress testing
- Stress testing
- Keywords:
- balance sheet
- bank
- capital plan
- capitalization level
- cash flow
- CR
- ECB liquidity provision
- Europe
- External balance assessment (EBA)
- Financial statements
- ISCR
- Liquidity stress testing
- recapitalization exercise
- recovery plan
- solvency stress
- Solvency stress testing
- Stress testing