ECB provides detail on stress-testing methods

The ECB’s Frankfurt headquarters

The European Central Bank (ECB) has explained how the use of “top-down” as well as “bottom-up” perspectives informed its input to the European Union’s most recent stress tests.

The 2016 stress tests of commercial banks in the EU were run overall by the European Banking Authority (EBA), with the ECB’s supervisory arm helping to examine the banks and to set the parameters used in the process.

The 2016 tests were seen as being “constrained bottom-up” stress tests by many commentators, a chapter i