EU proposes simulation testing of shockscoinmasterdailyfreespinslevvvelto better understand the role of banks in their relationship withcoinmasterdailyfreespinslevvvelThe risks faced by his financial firms, namely shadow banks.
Any such drills would "enhance regulators 'ability to identify risks and vulnerabilities," EU Financial Services and Markets Commissioner Mairead McGuinness said in a speech in Brussels on Wednesday. This needs to be done in a "system-wide manner" and involves "all relevant institutions in the banking and non-banking communities."
Demands for more information by senior EU financial officials have highlighted the growth of companies that provide credit but are not traditional banks-sometimes called shadow banks-that have attracted the attention of regulators. Although they have a deep understanding of the state of the banking industry, many developments outside the banking industry are outside their regulatory scope, although they are often interconnected.
"We may need to improve our ability to identify risks, especially hidden risks at intermediaries, which are often difficult to regulate," McGuinness said."We should strengthen supervision and awareness of the interconnection of the financial sector."
Regulators often conduct large-scale drills known as stress tests to simulate how banks will perform in severe crises. Such drills often require banks to compile and process large amounts of data, sometimes involving large numbers of employees, and take months.
In his speech, McGuinness said regulators conducting potential stress tests will seek to minimize the administrative burden on participants.