Benchmarking the European Central Bank's asset quality review and stress test: A tale of two leverage ratios

Viral Acharya, Sascha Steffen 21 November 2014

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In November 2014, the ECB published its asset quality review (AQR) and comprehensive assessment (ECB 2014), as well as capital shortfall estimates based on its stress test.  These results differed widely from our earlier assessment (Acharya and Steffen 2014). Indeed, the two shortfall estimates are negatively correlated.

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Topics:  Europe's nations and regions Financial markets Monetary policy

Tags:  systemic risk, ECB. banking supervision, capital shortfalls

Making sense of the comprehensive assessment

Viral Acharya, Sascha Steffen 29 October 2014

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Motivation

The ECB has finalised its assessment of the largest banks in the Eurozone before it commences their regulatory oversight in November 2014. It has now disclosed its own assessment about the solvency of the banking sector (ECB 2014).

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Topics:  Europe's nations and regions Financial markets Monetary policy

Tags:  systemic risk, ECB. banking supervision, capital shortfalls

Monetary policy and banking supervision

Sylvester Eijffinger, Rob Nijskens 19 December 2012

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Assigning the task of banking supervision to the ECB raises questions regarding the relationship between its primary mandate, monetary policy, and the newly attributed supervisory powers. A serious concern is that monetary policy runs the risk of no longer being independent. Therefore, it has to be ensured that the functions of supervision and monetary policy are clearly separated and independent from political control. However, monetary and financial stability are very much related and mutually reinforce each other, especially in the longer term.

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Topics:  EU institutions Monetary policy

Tags:  ECB. banking supervision