Problems with Stress Tests for Banks

As cited by Martin Wolf in today’s FT,   Andrew Haldane of the Bank of England has a very clear exposition of the problems with stress tests: you can read his speech here.

One reply on “Problems with Stress Tests for Banks”

The Haldane piece is well worth reading including his observation ” that stress-testing was not being meaningfully used to manage risk. Rather, it was being used to manage regulation. Stress-testing was not so much regulatory arbitrage as regulatory camouflage.” One might surmise that much the same happened here.

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