Will AI devour my pension?
Disruption to business models could leave corporate sponsors too stretched to cover DB scheme liabilities
Integrating climate risk into the 2025 EU-wide stress test: the effects of climate risks for firms
As authorities across the euro area work towards including climate risks into regular stress-testing frameworks, this article offers a starting point for assessing bank resilience to climate risks that materialise under a short-term horizon. This is relevant since acute physical risks and abrupt policy changes can also materialise at short notice and affect the balance sheet of financial institutions.
A framework to assess the severity of adverse scenarios in EU-wide stress tests
The severity and the plausibility of stress test scenarios are crucial elements for interpreting the results and ensuring the credibility of stress-testing exercises. This article introduces a comprehensive framework for assessing scenario severity and plausibility in the context of the adverse scenarios used in the EU-wide stress tests. Two families of indicators are developed, characterised by a backward-looking and a forward-looking perspective.
Integrating contagion risk into the 2025 EU-wide stress test: a system-wide analysis with amplification effects between banks and non-banks
This article expands the 2025 EU-wide stress test by incorporating a system-wide perspective to capture contagion risks across investment funds and insurance corporations alongside the banking sector. It examines potential short-term contagion effects under the EBA’s adverse scenario as financial institutions adjust their balance sheets in response to stress. These adjustments would result in additional average CET1 ratio depletion of 29 basis points, increasing first-round effects by 12%.
Simulating dynamic balance sheet reactions and macroprudential policy using the 2025 EU-wide stress test
Stress test simulations can enhance our understanding of the interplay between bank actions, the real economy and macroprudential buffers. Leveraging BEAST, the ECB’s workhorse top-down stress test model, this article explores impacts stemming from bank behavioural reactions by simulating them under the adverse scenario of the 2025 EU-wide stress test. The article shows that allowing banks to adjust their balance sheets only improves their capital ratios to a minor extent compared with simulations where they are assumed to keep their balance sheets constant.
Beyond the single bank: macroprudential insights from the 2025 EU-wide stress test and its extensions
This overview article provides an introduction to the 2025 Macroprudential Stress Test Extension Report (MaSTER), released as the 32nd edition of the Macroprudential Bulletin, which investigates how the EU-wide stress test and its extensions provide a broader assessment of the systemic vulnerabilities of euro area banks. The 2025 EU-wide stress test results are expanded via a top-down model-based toolkit to assess additional risks, perform policy simulation exercises, and present novel approaches to gauging the severity of the adverse scenario.
Singapore’s Temasek warns weak US dollar is hitting returns
Chief executive Dilhan Pillay says fall in greenback a ‘big issue’ for overseas investors
Hedge funds’ bets on Argentina pay off after US bailout
Emerging market and distressed debt specialists post big returns after US support and electoral win boost Buenos Aires
Europe’s battle for control of its money
Banks fear ECB plans for a digital euro will undermine a European alternative to Visa, Mastercard and PayPal
Global crypto rules for banks need reworking, says Basel chair
US and UK refuse to implement requirements for a risk weighting of 1,250 per cent for stablecoins
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