Cyprus Mail
BusinessOpinion

The political economy of the European Central Bank’s stress tests

By Stelios Papadopoulos

Eurozone banks that failed or barely passed this year’s health checks will have to demonstrate they can make sustainable profits and may need to sell off loss making units, the European Central Bank’s supervisor said. Danielle Nouy, who heads the ECB’s supervisory arm, told Reuters recently that simply finding more capital to plug shortfalls uncovered by the stress tests may not be enough. She also added that there are a number of banks that went through the comprehensive assessment, but might not go through next time’’. The ECB will launch a ‘’supervisory campaign’’ in 2015 that will scrutinize bank profitability and evaluate risks from poor quality loans and misconduct.

 

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