Bank stress tests

This list covers formal bank stress testing programs, as implemented by major regulators worldwide. It does not cover bank proprietary, internal testing programs.

Regulators devise hypothetical future adverse economic scenarios to test banks. These established scenarios are then given to the banks in their jurisdiction and tests are run, under the close supervision of the regulator. They evaluate if the bank could endure the given adverse economic scenario, survive in business, and most importantly, continue to actively lend to households and business. If it is calculated that the bank can absorb the loss, and still meet the minimum bank capital requirements to remain in active business, they are deemed to have passed.

For example, in the U.S. in 2012, an adverse scenario used in stress testing was all of the following:

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