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What was the 2016 European Union bank stress test?

2016 European Union bank stress test

The 2016 European Union bank stress test was the latest such exercise to be conducted by the European Banking Authority (EBA) to judge the resilience of Europe's banks to a new financial crisis. In contrast to previous tests, this one had no pass/fail threshold.

Where have you heard about the 2016 European Union bank stress test?

As an investor, you may have been made aware of the 2016 European Union bank stress test by your financial adviser or by the financial media in terms of what it said about the strength of Europe's banking system.

What you need to know about the 2016 European Union bank stress test.

The 2016 European Union bank stress test looked at 51 banks across the EU and the countries of the European Economic Area, covering about 70 per cent of total banking assets. As with previous tests, the EBA assumed an 'adverse scenario' - a notional financial crisis - and gauged the banks' capital levels against such a scenario. Said the EBA: 'The objective of the stress test is to provide supervisors, banks and other market participants with a common analytical framework consistently to compare and assess the resilience of large EU banks to adverse economic developments.' It added: 'The EU banking sector has significantly shored up its capital base in recent years.'

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