Mike Shedlock

Bloomberg reports ECB Said to Favor 6% Capital Requirement in Stress Test when it puts them through a simulated recession later this year, said two euro-area officials.

Strict Rules Revisited

With a hat tip to ZeroHedge, let's flash back to an October 23 Bloomberg report: ECB Capital Definition Tougher in Stress Test Than Review

The European Central Bank said it will use stricter rules when stress testing banks’ balance sheets next year than it will to study their assets, as it seeks to prove its credentials as the region’s financial supervisor.

While the ECB confirmed that it will require lenders to have a capital ratio of 8 percent, what qualifies as capital will change over the course of the three-part assessment, the central bank said in an e-mailed statement.

Ignazio Angeloni, who is head of the ECB’s financial stability directorate, said in Frankfurt “We’ve got a feasible but safe capital cushion of 8 percent. We want the exercise to encompass all the main sources of risk.

Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.