Falling short of expectations? Stress-testing the European banking system

Author
Viral V. Acharya, Sascha Steffen
Content Type
Policy Brief
Institution
Centre for European Policy Studies
Abstract
The eurozone is mired in a recession. In 2013, the GDP of all 17 eurozone countries fell by 0.5% and the outlook for 2014 shows considerable risks across the region. To stabilise the common currency area and its (partly insolvent) financial system, a eurozone banking union is being established. An important part of the banking union is the Single Supervisory Mechanism (SSM), which will transfer the oversight of Europe's largest banks to the European Central Bank (ECB). Before the ECB takes over this responsibility, it plans to conduct an Asset Quality Review (AQR) in 2014, which will identify the capital shortfalls of these banks.
Topic
Economics, International Trade and Finance, Regional Cooperation, Monetary Policy
Political Geography
Europe