British regulator calls on banks to step up stress tests

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The Financial Services Authority (FSA), the United Kingdom's financial regulator, has called on the country's banks to bolster their stress-testing capability.

The FSA said on Friday that it would require firms to enhance their capital planning stress testing and introduce a reverse stress testing requirement, whereby banks would have to identify and assess scenarios most likely to cause their current business models to become unviable.

Paul Sharma, the FSA's director of prudential policy, said:

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