Viral Acharya, Sascha Steffen, Friday, November 21, 2014 - 00:00
Viral Acharya, Sascha Steffen, Wednesday, October 29, 2014 - 00:00
The ECB conducted a comprehensive assessment of banks and identified capital shortfalls for 25 banks, totalling €25 billion. In this column, the authors provide a number of benchmark stress tests to estimate capital shortfalls. The analyses suggest possible capital shortfalls between €80 billion and more than €700 billion depending on the model. They find a negative correlation between their benchmark estimates and the regulatory capital shortfall, and a positive one between the benchmarks and the regulatory estimates of losses. This suggests that regulatory stress test outcomes are potentially affected by the discretion of national regulators.
Sylvester Eijffinger, Rob Nijskens, Wednesday, December 19, 2012 - 00:00
Eurozone leaders agreed to transfer bank supervision to the ECB with the detail yet to be fleshed out. It is widely acknowledged that giving the ECB two tasks creates a conflict of interest. This column argues that the two functions must be separated by setting up a Supervisory Board, operating independently within the ECB, and by granting the new supervisors a solvency instrument that is independent of the interest rate.