The stress test is designed to provide banks, supervisors and other market participants with a common analytical framework to consistently assess and compare the resilience of EU banks to economic shocks. As in previous years, the test does not include a pass-fail threshold as the results of the exercise will feed into the Supervisory Review and Evaluation Process (SREP).
The stress test will be conducted on a sample of 51 EU banks, including 4 UK banks, given that the 2020 stress test is taking place during the Brexit transition period. The scenarios of potential economic shocks being tested include interest rates remaining at very low levels, trade tensions and the UK failing to get an EU trade deal following Brexit.
The EBA expects to publish the results by the end of July.