As regards the new round of the EU-wide stress test, which will be conducted under the aegis of the newly established European Banking Authority (EBA), it is designed as a sufficiently severe and rigorous exercise to be credible. It is expected to reduce uncertainty among market participants concerning the health of European banks. Let me just mention some of the enhanced features.
In any case, the sequencing of steps and the combination of tools that the Federal Reserve uses as it exits from its currently very accommodative policy stance will depend on economic and financial developments and on our best judgments about how to meet the Federal Reserve’s dual mandate of maximum employment and price stability.