SUERF Policy Brief – The way forward for EU-wide stress tests

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EU-wide stress tests have constituted a very useful supervisory tool for increasing the resilience of the EU banking sector. This policy brief claims that the current EU-wide stress tests could benefit from the incorporation of some changes: implement a predominantly top-down approach, allow for dynamic balance sheets, foster the integration in the supervisory process (SREP, ICAAP, recovery plans), develop more than one adverse scenarios, reintroduce binding hurdles, and last but not least move to a full ownership of the exercise by the supervisor.

Published on the SUERF website