The European Central Bank has just published the results of new "stress tests" on European Union banks, hoping to convince financial markets that the banking system is now strong enough to weather another crisis. This latest exercise is a big improvement over previous efforts, which were widely derided as too soft -- but it's still not good enough.
The test had two parts. The first was a detailed examination of loans, to see whether they were worth what the banks said. This found that most of 130 banks under review had overvalued their assets -- by a total of 47.5 billion euros ($60 billion) at the end of last year. The second part asked, with assets correctly valued, whether the banks had enough capital to safely endure another recession and financial-market shock. It found that 25 did not, and 8 of those need to raise 6.4 billion euros in capital, over and above what they've added so far this year.