This scenario assumes the emergence of funding difficulties for banks in stressed countries that would arise from deposit outflows and reduced access to wholesale funding markets. This would imply higher interbank and customer loan rates. It would also induce banks to restrain their lending in order to comply with loan-to-deposit ratio targets - also in the light of the upcoming Basel III liquidity requirements.
3. Increased risk aversion. This scenario investigates the risks arising from a global unwinding of the search for yield. It assumes an abrupt increase in investor risk aversion worldwide, which results in stock price declines and a marked increase in corporate bond spreads, thereby raising interest rates in the more risky market segments.