The third component is the stress test that will build on and complement the asset quality review by providing a forward-looking view of banks’ shock-absorption capacity under stress. This process has already started. After a pilot phase during which the ECB called for – and subsequently integrated – feedback from the banks, the ECB on 18 November sent out the templates for data collection.
Since most of the experts point to the lack of regulation as one of the root causes of the US subprime market crisis, it is therefore tempting to swing to the other extreme of over regulation. I don’t believe that we should move towards that direction. Instead, what I believe should occur is a move towards greater accountability.