BoE stress tests 'worse than useless' says thinktank

Use of 'insufficiently stressful' scenarios

Laura Dew
clock
BoE stress tests 'worse than useless' says thinktank

The Bank of England stress tests are fatally flawed and providing "false comfort", according to a new research paper by the Adam Smith Institute.

In a paper today entitled No Stress II: The flaws in the Bank of England's stress testing programme, the free market thinktank said these tests were unreliable and highlighted there had not been a single case worldwide where stress testing had provided a warning of a financial crisis. Stress tests assess the potential fall in bank's capital in the event of adverse economic conditions and are intended to help understand how banks would cope in financial crises. However, the paper said that, instead of providing credible assurance that the banking system is safe, they found the Bank of ...

To continue reading this article...

Join Investment Week

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Economics

European-focused investment grade and high yield credit have highest inflows since April 2020.

Fixed income dominates ETF flows in July

Accounted for $32.5bn

clock 08 August 2022 • 2 min read
Investors look away from energy intensive sectors such as chemicals, metals and manufacturing.

'An investor's worst nightmare': Energy rationing spells greater chaos for supply chains

Business confidence falls

clock 05 August 2022 • 5 min read
Bank of England governor Andrew Bailey

Bank of England gilt sales 'unlikely to upset markets too much'

Central bank raises rates to 1.75%

clock 04 August 2022 • 3 min read
Trustpilot