Peter Bofinger, Christian de Boissieu, Daniel Cohen, Wolfgang Franz, Jean Pisani-Ferry, Christoph Schmidt, Beatrice Weder di Mauro and Wolfgang Wiegard warn against a false sense of security, which European governments seem to be lulled into, and propose common tests to evaluate the true state of Europe's banking system based on common macro scenarios, common valuation rules and common stress assumptions. The authors believe these respective tests should be done for all the largest European banks simultaneously and the results should be published for each bank, leading to a centralised oversight of the tests, and aggregation of results. After months of financial gloom, summer has brought some relief. However, there is now a danger that policymakers and market participants are lulled… Read more
Bruegel blog
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Europe must take control of banking stress tests
31st May 2009
