In a setting in which financial analysis is communicated to the public it is important to find the balance between making realistic assumptions about scenarios and avoiding devastating self-fulfilling prophecies of the markets. Moreover, if stress tests detect capital needs private and public recapitalisation has to be announced and implemented, thereby preventing market uncertainty.
In a systemic crisis recapitalisation has to be a part of a comprehensive package including public aid for banks. This aid helps to restore confidence in the wholesale markets, to overcome funding problems and ultimately to mitigate excessive deleveraging pressure. 4.