13 May 2009

Stress Tests for Europe on the Cards

The IMF's spring forecast for Europe was a bit of a blow to financial sectors - investors, banks and the foreign exchange market....

Overall, it forecast that the stronger economies of Europe will contract by 4% in 2009, and that those of the emerging economies would shrink by 4.9%.

Now, the IMF is calling for Europe to mirror the USA's recent actions and take out stress tests on banks around the region. The IMF believes Europe urgently needs an indicator on the status of the banks and their performances, plus better clarity as to losses.

Doing stress tests in the USA did help to gain confidence for the country as a whole, but would it also provide back up to the IMF's dire forecasts? Or would it show that there may be more to be positive about?

No comments: