European banks: Stress relief

FIVE years ago this month, the discovery of a black hole in Greece’s public finances marked the start of the euro-zone crisis. Policymakers have scrambled to contain it ever since. The outcome of their latest ploy, a probe of the continent’s banks intended to demonstrate their solidity, was revealed on October 26th. Results were mostly encouraging, at least outside Italy. But more will be needed to prod Europe’s economy back to growth.Run over several months and involving 6,000 staff, the “stress tests” were certainly more diligent than Europe’s past attempts, which on several occasions resulted in banks faltering soon after they were pronounced healthy. Much of the work was overseen by the European Central Bank (ECB), which is taking over regulation of the euro zone’s biggest lenders next week.Probing the books of the 130-odd banks involved unearthed minor flaws rather than the graveyards of skeletons some had feared. The ECB found €136 billion in troubled loans banks had not already owned up to, bringing the European total to €879 billion ($1.1 trillion). But the correction is piddly compared to the €22 trillion of assets they hold.Regulators...



from The Economist: Finance and economics http://ift.tt/1p6kG9n