360° Coverage : Bank of England unveils stress test plans

Bank of England unveils stress test plans

London, Oct 2 (IANS) Bank of England (BOE) unveiled plans for stress testing of British banks which could see increases in the amount of capital they are obliged to hold.

Oct 2 2013, 6:04am CDT | by IANS

Bank of England unveils stress test plans
Photo Credit: , Getty Images

London, Oct 2 — Bank of England (BOE) unveiled plans for stress testing of British banks which could see increases in the amount of capital they are obliged to hold.

"Looking to 2014 and beyond, the Bank and Prudential Regulation Authority (PRA) should develop proposals for regular stress testing of the British banking system. The purpose of those tests would be to assess the system's capital adequacy," the bank said in a paper.

The bank's position as spelt out in a discussion paper that follows recommendations from the Financial Policy Committee (FPC) of the BOE in March 2013, Xinhua reported Tuesday.

Details include the expected coverage of institutions, considerations around scenario design, and the approach to modelling the impact of scenarios on bank profitability and capital ratios.

It discusses how the outputs of stress tests could be used to inform policy decisions and options around disclosure of stress test results.

The BOE has already been running stress tests on banks on an ad hoc basis in the wake of the 2008 financial crisis.

In a speech Tuesday in London, BOE deputy governor Paul Tucker examined how a clear framework for stress testing banks and other key financial institutions can help micro and macro-prudential regulators.

Tucker said a "stress testing regime can enhance the quality of the bank's macro and micro prudential supervision and over time, underpin confidence in the banking system".

"Policymakers need a good framework for assessing banks' capital adequacy in different circumstances, both at the level of the system a whole and for individual firms," said Tucker.

IANS

Source: IANS

 
 
 

blog comments powered by Disqus

Latest stories

Need for Speed Reboot is Coming This Fall
Need for Speed Reboot is Coming This Fall
EA will release a complete new Need for Speed this fall. The video game giant just released a teaser video and the first Need for Speed Gameplay video will be revealed in June.
 
 
Google Self-Driving Cars to Hit Public Roads this Summer
Google Self-Driving Cars to Hit Public Roads this Summer
Google announced today that Google Car prototype vehicles will leave the test track and hit the familiar roads of Mountain View.
 
 
Google Search Analytics Launched in Web Master Tools
Google Search Analytics Launched in Web Master Tools
Google officially announced the new Search Analytics feature in Webmaster tools.
 
 
T-Mobile Hits Verizon with new 'Never Settle Trial' Campaign
T-Mobile Hits Verizon with new 'Never Settle Trial' Campaign
In case customers don't feel satisfied, T-Mobile will pay for them to shift back to Verizon