The EBA announced a new round of stress tests

The EBA Board of Supervisors agreed yesterday on a strategic work plan for an EU-wide stress test to take place in the first half of 2011 and to publish results in mid-2011.

The 2011 stress test will be carried out in cooperation with the national supervisory authorities, the European Systemic Risk Board (ESRB), the European Central Bank (ECB) and the European Commission, and will cover a broadly similar group of banks as last year.

The methodology and approach taken will build on that used in the 2010 stress test.  The results will be subject to a stringent review and quality control process.

The objective of the stress test is to assess the resilience of the EU banking system to hypothetical stress events under certain restrictive conditions. The stress test is one of a range of supervisory tools for assessing the strength of individual institutions as well as the overall resilience of the system.

This stress test is a part of the framework for the assessment of the resilience of the financial sector being built by the European System of Financial Supervision (ESFS) and will be carried out in parallel with stress tests undertaken by the European Insurance and Occupational Pensions Authority (EIOPA).