Tuesday 24 April 2018

'Marathon' stress tests will get Irish economy over the finish line

Stress tests are like running a marathon
Stress tests are like running a marathon

Thomas McAleese

STRESS tests are like running a marathon. They expose banks to severe scenarios over the next three years to see if they finish in good condition as well as with a good time.

The European Central Bank (ECB) is currently conducting a Comprehensive Assessment of the top 128 banks in Europe, in advance of these banks joining the Single Supervisory Mechanism (SSM) before coming under its supervision in November 2014.

This includes an Asset Quality Review (AQR) of the banks' balance sheets at December 31, 2013, followed by a stress test, which is a 'forward-looking' evaluation of expected losses over the coming three years (2014 – 2016).

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