ECB launches climate risk stress tests
Exercise will feed into SREP and could indirectly affect lenders’ capital ratios, ECB says
The European Central Bank launched its first climate risk stress test of the banking system today (January 27).
The ECB said the results could indirectly affect banks’ capital requirements, although they would not “directly impact capital through Pillar 2 guidance.” It said the tests aim to assess how well prepared banks are to deal with financial and economic shocks stemming from climate change.
The tests will apply to the banks directly supervised by the ECB, 115 institutions. This group
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