Context and objectives
- The banking industry has been subject to numerous major reforms since the financial crisis to make the financial system more stable and secure. Since the global financial crisis of 2007, the stress test exercises have become progressively predominant in the range of tools used by prudential authorities.
- The EBA, in cooperation with the European Systemic Risk Board (ESRB), initiates and coordinates EU-wide stress tests to assess the resilience of financial institutions to adverse market conditions. The objective of the EU-wide stress test is to provide supervisors and market participants with a common analytical framework to compare and assess the resilience of EU banks.
- The stress test is conducted on the basis of a common methodology with relevant scenarios and a set of templates that record the starting point data and stress test results to allow the assessment of EU banks.
- 2018 EU-wide stress test draft methodology has been released on June 7th 2017. It is subject to discussion between the banks and the regulator.