IMF develops stress test for central bank balance sheets
Framework designed to help risk teams determine appropriate profit distributions
Staff at the International Monetary Fund have developed a new framework to allow central banks to stress-test their balance sheets to provide greater assurance they have sufficient buffers to conduct policy.
The IMF published a note on December 23 detailing the framework. It includes a method of forecasting individual balance sheet items over a five-year horizon to produce an overall forecast, which can then be tested under various scenarios.
Central bank balance sheets have faced an array of
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