EBA publishes its Peer Review on the performance of stress tests by Deposit Guarantee Schemes

The European Banking Authority (EBA) today released the findings of its latest Peer Review on the performance of stress tests by deposit guarantee schemes (DGSs) across the European Union. This comprehensive review assessed how seven national DGSs performed stress tests against benchmarks developed for the purposes of this Peer Review. The benchmarks derive from the Deposit Guarantee Schemes Directive (DGSD) and the Revised EBA Guidelines on stress tests of deposit guarantee schemes. Stress tests of DGSs are essential for maintaining financial stability and protecting EU citizens. By rigorously assessing the performance of DGS stress tests, the EBA aims to continuously enhance the preparedness of DGS to handle bank failures and safeguard depositors' funds. The review found that all seven DGSs have effectively developed their stress testing programmes in line with the guidelines, with only minor shortcomings. All seven DGSs have also demonstrated effective cooperation with relevant authorities, with robust stress testing of these arrangements.  However, only five of the seven DGS could fully or largely demonstrate that they have: performed all the mandatory core stress tests, using realistic assumptions and conducting objective evaluations; increased severity and complexity of their testing scenarios to adequately stress test their ability to intervene; and identified areas for improvement in their systems and have taken or planned actions to address these areas. The Report...