EU finance ministers have Wednesday agreed on the broad outlines of another stress tests on major European financial institutions. I’m not really sure what happens during an European Stress Test, but it seems to make a lot of people happy. Perhaps it’s some kind of big party – like a festival, or something. Anyway – I’m sure it will be fun.
And this years stress test will be even better than last year, when they somehow forgot to invite the Irish, the prominent people of Brussels promise. But, like last year, the organizers are not sure if they will tell us all about it, or not.
Please forgive the sarcasm, but if the new European Banking Authority is going to be taken just a little bit serious, the stress test has to be conducted with total transparency.
Nothing less will ever be able to restore the lost confidence in this maneuvers.
“We are going to draw the lessons by making the next tests more rigorous and even more credible,” says internal market commissioner, Michel Barnier, at the end of a two-day meeting between Europe’s economy chiefs in Brussels.
The new stress tests will this time also take into account underlying capital, liquidity and exposure to sovereign debt.
In July last year, the financial strength of 91 institutions was tested against potential crisis situations. Only seven failed the examination.
The methodology this time, which will imagine even more severe crisis situation, notably in property markets, has yet to be agreed upon, but will be undertaken by the new European Banking Authority, with ministers expecting the tests to be completed by the end of May.
The level of disclosure once the results are concluded however remains a point of division amongst ministers.
The new test comes as Portugal, currently in the euro zone’s sovereign-debt emergency room, sees increased pressure on its bond yields, with rates climbing on 10-year bonds to 6.951 percent, shy of the seven-percent level thought to be the tipping point for the country to request a bail-out.
Meanwhile on Tuesday, the Hungarian EU presidency enjoyed renewed opprobrium from other member states when the country’s finance minister made the gaffe of publicly saying the euro zone debt crisis could last another ten years, the EUobserver.com reports.
There is a likelihood “that the euro is endangered for another decade,” he says.
Well, that’s just what I pointed out in my commentary on Eve.
Related by The Swapper:
- Saxo Predicts Public Debt Catastrophe, Insolvent Banks
- EU: No Bail In, Just Eternal Bailouts
- The EU Stress Test: Working The Media
- European Bank Stress Tests Are Loosing Credibility
- All Nordic Banks Will Pass Stress Test, Nordea Says
- Norway: Most Banks Fail In Stresstest
- Stress Level Rising In Europe; Some Banks Might Not Survive
- EU Stress Test May Trigger Capital Injection Of EUR 85 Billion
- Barroso: EU Has Survived The Economic Crisis
- People’s Confidence In The EU Drops To Record Low
- EU Looks to US for Advice on Bank Stress Tests (abcnews.go.com)
- Euro-Zone Aims for Fund Increase (online.wsj.com)
- EU to include liquidity in bank stress tests (theglobeandmail.com)
- EU Pledges Tougher Stress Tests, Seeks Bonus Curbs (businessweek.com)
- Europeans Vow to Get Tough on Bankers Pay (nytimes.com)