Mersch Expects ECB Stress Tests to Have 3-Year Horizon
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European Central Bank Executive Board member Yves Mersch said stress tests on euro-area banks will probably simulate three years of negative economic conditions as part of a check on the financial system’s health.
“Our deliberations are tending toward these tests having a three-year horizon, to the end of 2016,” Mersch, who is helping to oversee the ECB’s preparations to become the currency bloc’s bank supervisor, said at a conference in Frankfurt today. “We would therefore end up with a base scenario and a so-called stress- or worst-case scenario. So, two scenarios.”