Stress testing has been a successful crisis response tool to provide insight into bank capitalisation. As countries emerge from the financial crisis, stress testing is becoming part of banks’ own risk management as well as part of the toolkit of bank supervisors. This course will cover the history, the main policy issues and the tools needed to address them. We will draw from the European and the US, from private and public sector experience.

Eugenio Cerutti, Christian Schmieder, 13 April 2013

The bank ‘stress-test’ is now a crucial crisis-fighting tool. This column discusses research into the shortcomings that arise from ‘ringfencing’, that is, the implicit or explicit regulations that hope to favour domestic markets. Notably, ringfencing could significantly increase some banks’ capital needs.

Nicolas Véron, 20 December 2010

While politicians have hailed the bailouts of Greece and Ireland as necessary and responsible, there are many who feel that burdening taxpayers is grossly unfair. This column argues that Europe’s governments should lead a process of ruthless triage, recapitalisation, and restructuring of the region’s most important banks. It adds that while this will be extremely disruptive, the alternative may threaten the political fabric of the EU.


CEPR Policy Research