Wall Street Journal (July 24)
The European bank stress tests leave one “not much wiser.” For fear of suggesting the EU’s bailout package is insufficient, the stresses did not include a test for a sovereign default. The tests were restricted to more modest (and less revealing) shocks. The tests, however, could have been even less useful. Germany opposed the public release of results for individual banks. In the end, Spain and several other countries won this argument so bank-by-bank data is available.
The European bank stress tests leave one “not much wiser.” For fear of suggesting the EU’s bailout package is insufficient, the stresses did not include a test for a sovereign default. The tests were restricted to more modest (and less revealing) shocks. The tests, however, could have been even less useful. Germany opposed the public release of results for individual banks. In the end, Spain and several other countries won this argument so bank by bank data is available.
Tags: Banks, Europe, Sovereign default, Stress tests
