Keeping watch: EBA stress-testing head plans overhaul
Top-down approach, dynamic balance sheet and multiple shock scenarios all possible for 2022
Who will watch the watchmen? It’s a centuries-old question, and the European Banking Authority (EBA) knows the answer. It’s the European Court of Auditors.
In early July, the ECA produced a report that scrutinised the regulator’s 2018 stress test of European banks. The court called for more “top-down” stress tests, giving the regulator more control over the process, questioned the sample of banks chosen and complained that the test’s shock scenario was in some cases less severe than the 2008
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