Further Analysis of the Stress Test of Banks’ Capital Adequacy in Financial Stability 2/2010

Abstract

Economic Bulletin includes more detailed information about the stress tests that are presented in the report series Financial Stability. In the tests, banks’ accounts are projected over a four-year period. In this analysis, the construction of the stress alternative in Financial Stability 2/2010 is presented as well as the sensitivity of the results to changes in key assumptions. The results of the stress tests show that banks can maintain a sound level of capital adequacy even if economic growth should prove to be weak several years ahead. A broad range of sensitivity analyses show that banks can also absorb more severe economic shocks than those incorporated in the stress test.