Euro zone lenders' days to be numbered in new ECB bank-run simulation

FILE PHOTO: The headquarters of the European Central Bank (ECB) is illuminated with a giant euro sign at the start of the "Luminale, light and building" event in Frankfurt, Germany, March 12, 2016. REUTERS/Kai Pfaffenbach - Copyright Kai Pfaffenbach(Reuters)

By Reuters

Published on 06/02/2019 - 14:04•Updated 20/04/2024 - 03:48

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FRANKFURT (Reuters) - The European Central Bank will tell banks how many days they would have before going bust if there was a run on their cash under a new stress test unveiled on Wednesday.

"ECB Banking Supervision will test adverse and extreme hypothetical shocks in which banks face increasing liquidity outflows," the central bank said.

"The exercise will focus on banks’ expected short-term cash flows to calculate the 'survival period', which is the number of days that a bank can continue to operate using available cash and collateral with no access to funding markets."

(Reporting By Francesco Canepa)

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