Bank of England launches first ‘exploratory’ stress test
The Bank of England published its first “exploratory” stress-test scenario today (March 27), aiming to assess banks’ ability to withstand a long period of weak returns.
For the first time, this year banks will be tested on both a shorter-run “cyclical” scenario and an additional “exploratory” scenario. The cyclical test will retain capital ratio “hurdles” that banks will be expected to clear, while the exploratory one asks banks to explain what actions they would take to remain profitable
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