The European Central Bank (ECB) published the final results of its liquidity stress test (LiST) in the form of a PowerPoint presentation which shows a recap of the key features of the LiST, the 2019 aggregate results, and the integration of 2019 stress-test results into the supervisory review and evaluation process (SREP). Most banks directly supervised by the ECB have overall comfortable liquidity positions according to the results of the stress test, which focused solely on the potential impact of idiosyncratic liquidity shocks on individual banks and did not assess the potential causes of these shocks or the impact of wider market turbulence. About half of the 103 banks that took part in the exercise reported a “survival period” of more than six months under an adverse shock and more than four months under an extreme shock. Areas of vulnerability identified included data quality problems, collateral mobilisation practices, awareness over impact of rating downgrades, foreign currency “mismatches”, and intragroup funding dependency of subsidiaries outside the euro area. The results are being used by Joint Supervisory Teams in the 2019 SREP, amongst other factors, to adjust the Liquidity Adequacy Score.

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