ECB Tests How Long Until Banks Go Bust Without Funding

Law360, London (February 7, 2019, 8:11 PM GMT) -- The European Central Bank has said that it will measure the “survival period” under which Europe’s banks can operate without fresh outside funding as part of a new test designed to lessen the risk of lenders going bust.

The ECB said on Wednesday that it will analyze the amount of cash that banks are currently holding and test how long this will prop them up during adverse and extreme shocks to their funding methods.

The exercise, which the ECB said it will complete in four months, will allow the regulator to make improvements to banks’ management of their liquidity risks. But...

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