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The central bank has run its first-ever bank-by-bank stress test, based on a severe recession scenario. Of the seven participating banks, three would fall below
- The central bank has run its first-ever bank-by-bank stress test, based on a severe recession scenario. Of the seven participating banks, three would fall below the minimum capital requirements in the stress scenario, but the aggregate shortfall is small: adding up the three banks' losses amounts to 0.25% of GDP. The Governor is delighted: these results are great! The Communications Department has drafted the following press release, which the Governor has asked you to review before finalizing:
"Based on the results of the recent stress test, our banking system is strong and able to withstand all kinds of shocks.) Even in the event of an extreme slowdown in growth, the sum of the capital shortfalls of our banks would be small and easily accommodated."
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