Simply the BES: a stress test with an impact
The Bank of England’s new biennial ‘exploratory’ scenario (BES) suggests stress testing has entered an improved and more mature phase, putting the spotlight on business models as well as capital adequacy.
Regulators are increasingly looking to create more dynamic stress tests, as a way of understanding more clearly how banks can manage shocks while still functioning healthily.
But the Bank’s new scenario is a milestone in this respect.For the first time, a central bank will ...
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