Europe’s top regulator has thrown his support behind dual-track stress tests on banks to check the adequacy of both their underlying capital and liquidity in crisis situations.Michel Barnier, European commissioner for the internal market that includes financial services, backed a proposal from the new European Banking Authority, which is spearheading the latest test, for separate but parallel evaluations of liquidity and capital.
The new European Banking Authority, where key decisions are made by a 27-strong board of national bank supervisors, signalled last week that it planned “a separate thematic review of liquidity funding risks across the EU banking sector”. But it also suggested that this would be an internal review only – with results used to “inform supervisory authorities about areas of vulnerability”, rather than a public exercise.
For more: FT.com / Brussels - EU watchdog backs parallel stress tests
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