A review of the discussion proposal on changes to the EU-wide stress test

Abstract

In 2020, the European Banking Authority (EBA) launched a public consultation on future changes to the European Union wide stress test (EUWST). The EBA proposes a dual approach across four broad criteria of relevance, comparability, transparency, and cost efficiency: a supervisory leg as the basis for Pillar 2 Guidance decisions and a bank leg to provide information and foster market discipline. Prior to new methodological proposals, an accurate global and summarized overview of what has been accomplished so far is required. This paper presents a synthetic review of the EBA’s vision for the EUWST’s future and feedback review.