Cause and Effect in European Politics and Law

The EU should stress test its banking system

Adelina Marini, May 13, 2009

The European Union will stress test its banking system in the months by September to check their resilience to the economic downturn as well as to find out whether they are adequately capitalised, reported source to Reuters, quoted by the online media EurActiv today. The Stress test will be implemented by the national supervisors, according to the directions and methodology of the Committee of the European Banking Supervisors. The results of the test will not be made public, reports the agency.

The decision to stress the banking system had been taken by the EU ministers of finance, said a source familiar with the ministers' deliberations.

In the meantime, the IMF recommended that the EU should upgrade its recovery plan by undertaking bolder steps to fix its banks. The Fund also recommended the Union to put its banking system on stress test as well as to improve the national policies coordination so as to avoid worsening of the recession, forecast by the IMF for 2009.