In the wake of the financial, economic and sovereign debt crisis, central banks are being urged to take measures to support the financial system, stimulate economic activity, reduce government funding costs and even safeguard government solvency. Overburdening central banks with tasks and expectations, however, is certainly not the right way to achieve a lasting solution to the crisis.
These exercises include the independent loan loss forecasting and stress testing exercises carried out earlier this year to help establish the capital needs of the banks under the Prudential Capital Assessment Review (PCAR).