In the future, having learned the lessons of this test, we will be able to rely on the automatic restrictions of our carefully developed framework when the stress test tells us the system will be resilient, rather than using ad hoc and roughly improvised limitations.3 We cannot say, however, that the entirety of the financial system performed well, even parts that were subject to reforms following the financial crisis.
The CFSA owes its origins to the Financial Sector Assessment Program, FSAP for short, that was initiated in 1999 and carried out jointly by the IMF and the World Bank after the Asian crisis. Several countries, including India, participated in this long drawn and resource intensive exercise.