BoE launches first ‘system-wide’ stress test
Analysis will assess how banks and non-banks interact to amplify shocks
For the first time, the Bank of England is preparing to test how banks and non-banks interact and potentially amplify a bout of stress across the entire financial system.
The system-wide exploratory scenario (SWES), launched today (June 19), goes beyond standard stress-testing, which tends to operate on the level of individual firms. “The SWES is the first exercise of its kind, and it offers a novel opportunity to better understand system-wide dynamics,” the central bank said.
The exercise
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