I would essentially highlight three issues: •  First, that the exercise should be rigorous and demanding in terms of its scope. Contributing to this is the breadth and depth of the portfolios to be analysed in the asset quality review, the involvement of independent consultants and auditors, the consideration for the stress test of a very harsh macroeconomic scenario, and the setting of capital thresholds appreciably higher than the regulatory minimum set: 8% in the baseline scenario and 5.5% in the adverse scenario. •  Second, that the exercise should be robust from the legal standpoint and reasonable from the economic perspective. Specifically, the exercise should observe current prudential and accounting regulations. In this connection, it uses the definitions of regulatory capital in force at present, in keeping with the European Directive and Regulation on capital requirements. Moreover, the macroeconomic scenarios being designed for the stress test should include shocks to economic variables that are mutually compatible and consistent with past experience and economic logic. That is to say, as publicly announced by the ECB, the adverse macroeconomic scenario ultimately adopted should be severe but plausible. •  Third, we should expect the analysis to be balanced. Namely, it should seek to reflect and analyse the impact of all factors of vulnerability of European banks in terms of their objective relevance, irrespective of how technically difficult their treatment is.
As indicated on several occasions, the overall aim of the comprehensive assessment of banks is two-pronged: on one hand, the exercise seeks to offer a high degree of transparency concerning the situation of banks whose supervision will be conducted by the single supervisory mechanism as from November; on the other, it intends to promote the recapitalisation of those viable institutions that show insufficient levels of solvency. Both  2  BIS central bankers’ speeches  avenues will help reinforce the credibility of European banks ahead of the transfer of the supervisory function to the new authority. I should emphasise that it would be mistaken to quantify the value of the stress test in terms of the capital requirements it brings to light; and even more mistaken to measure its success on the basis of the proximity of the final result to the relatively sizeable estimates in the analyses published so far which, often, have been lacking in information and rigour. Experience shows that, beyond the size of the capital shortfall identified, these analyses are only credible if they manage to provide rigorous and consistent information on banks’ real situation and their ability to withstand adverse scenarios. Accordingly, the strategy to pursue can be none other than to ensure the methodological soundness and consistency of the exercise, and to provide the market with sufficiently accurate information on the results obtained and the process followed. In this respect, what should reasonably be expected from the comprehensive assessment under way?