Should European banks conduct stress tests to give a better sense of the economic state of the country?
I believe in transparency with banks, so there are no "bubble" effects.
Just see what happened to the USA, when the banks packaged the high-risk mortgages. It brought the U.S. economy down to its knees. The stress tests will help avoid these types of problems. As we are all globally connected, no large power should be allowed to jeopardize the rest of the world and so many innocent people.
Posted by: DisillusionedGilberto67I believe it would be a benefit to the people if European banks were to give stress tests to get an idea of the country's economic stability because it would be an indicator of the quality of living.
Money and related issues are often the cause of stress in most developed countries. For this reason, I think that giving a stress test directed towards the bank and it's proprietors would offer a view of the way money is effecting people. When the economy is doing poorly, people often feel stressed because their livelihoods are in danger. Additionally, with the rise of social and contemporary media, the indications of a poor economy causes increased anxiety for all parties involved.
Posted by: ObsoleteDamon27Price fluctuates daily. If people are scared of losing money they shift it quickly; the more action, the less confident they are as a whole.
People use taxes and market drops to determine the strength of their cash to insure their livelihoods. The moment the strength fades, money shifts. A stress test in infrequent amounts would allow the banks to determine how confident people are in their investments.
Posted by: BearI agree with European banks conducting stress tests to get a better sense of the economic state; it will help in understanding what is needed to be done.
Stress tests to determine the economic state, done by European banks, can help determine economic conditions. People will be comfortable with banks doing it because they know that banks are trusted and secure. Also they will have no reason to lie to them because it could prove helpful to themselves. I think that if they did this, they could determine what steps are needed to improve the economy and start working on those issues.
Posted by: boobopAbsolutely, all banks need to be stress tested to ensure liquidity if another economic bubble forms.
European banks did undergo a stress test mid-summer. The result was a few minor findings, however in large the banks passed. However looking at what was actually tested, it is clear that measures put in place to avoid a financial collapse will only work if the exact measures used in the testing took place. So in that respect, ALL banks need to undergo a real stress test.
Posted by: SpoiledKrisGiven the economic problems of the past several years banks should meet requirements to ensure their stability.
The past several years has shown that most banks are incapable of policing themselves. Banks should be required to meet stricter requirements to ensure their stability. Stability is important because banks that fail are a liability for taxpayers and the economic stability of a nation. Without stricter standards further bank failures could be a serious problem.
Posted by: TlnAlandI believe European banks should conduct stress tests for a better sense of the state of the economy.
In today's world, economies shift constantly. There's no completely safe, and unwavering country as far as economy. A stress test sounds as though it could help give an appropriate feel for the economy, instead of having a sudden negative shift completely catch everyone by surprise. America had a lot of banks close down with the recent shift, Europe should be wary to not repeat the same mistakes, such as not being able to handle all the money currently circulating.
Posted by: bambiroo24European banks should definitely conduct stress tests for a better sense of the economic state of the country.
European banks should definitely conduct stress tests. They need to make these tests very rigorous though, or it could end up being a waste of time. The tests must be rigorous enough and administered in a fair way. These tests should provide good information so that consumers can better understand their risk exposure.
Posted by: JeffP4ri5A stress test is a good way to determine the current state of the European economy.
If the European community wants a valid way to determine if their economy is stable then a stress test is a good solution. The stress test will tell them how solid the banking system is and if the economy is on the right track. The concern might be that a poor stress test score will drive down the price of stocks. However, it is worth the risk to ensure that the community has strong, reliable information about the state of the economy. If they don't know the current state, how are they supposed to react to it?
Posted by: VasilBuddy
They aren't needed, because we already know that the economy is under stress.
The economy is under tremendous stress. It is already a fact, and "testing" it is only going to infuriate the people. If that is not obvious to the bank owners, to where they have to conduct "tests", then the people in charge of the banks should be fired for being idiots.
Posted by: OvalKurtis26I oppose stress tests for banks, because businesses should be allowed to swim or drown on their own.
When things start going bad in an economy, governments should absolutely take corrective program actions, and provide social safety nets for citizens at the bottom. However, this does not include stress tests for banks. Corporations are legal entities, just like people. If it's not okay for the government to conduct triage and decide which citizens get to live and die, then it shouldn't for corporations either. If too many banks do fail, the government should instead provide social programs that act as banking alternatives.
Posted by: FlakyHerb64Stress tests provide superficial security and actually increase risk-taking.
Stress tests rarely catch the bubble that is coming, only the issues of the past. Major economic disasters result from sloppy thinking, and these assumptions are typically built into stress tests. Running stress tests only confirms the biases of the modelers. Instead, businesses should just opt for transparency, and let analysts form their own conclusions.
Posted by: CarMjNo, I believe that it won't actually help, because the past has shown us so.
During the Great Depression, the United States government ordered "tests" of over 10,000 banks and declared virtually all of them passing. Mind you, the fact that they had remained open was a good sign. But the government did not actually review many banks, if any. It was really just a show for the benefit of the public.
Posted by: P0nyTobiI don't believe stress testing should be required in European banks, because I don't think they would accurately indicate what they are meant to show.
Stress testing may identify if people are under pressure, but it may or may not have anything to do with the banking industry. Personal stresses may be identified, but there is nothing that the banking industry can do about them. Unless the banks in Europe do something to help their workers out, then the survey proves useless.
Posted by: R3thHoPeA stress test isn't going to give a sense of the economic state of the country, actual statistics will.
Rather than wasting time and money on conducting stress tests, European banks should focus on studying the fluctuations over the years of their economy to get the most accurate idea of what the economic state of the country is like. Stress tests can be a part of this, but they're not going to tell you enough to determine the state of the entire economy.
Posted by: jaamata