Position paper - EU-wide stress test

Post-Brexit the EU banking sector has changed significantly, and it will continue to change as EU subsidiaries of non-EU banks continue to grow their footprint in the Union. It is important the EU supervisory toolkit also evolves, in line with the changed landscape. This requires the willingness to take a fresh look at the existing framework and make the appropriate changes to continue to ensure that tools available to competent authorities are fit-for-purpose. While we understand the potential benefits of having top-down constraints which make stress test results easier to compare, it’s important that the results of the test generate a true picture of the resilience of the individual banks.

Ahead of the 2025 stress test, the European Banking Authority (EBA) should examine the existing framework and make the appropriate changes to continue to ensure that the tools available to competent authorities continue to meet their intended objective.