Distressing Stress Tests
Europeans hope that the recent publication of the results of stress tests of their banks will have the same stabilizing effect in Europe that last year's stress tests of US banks produced in America. But, while the results of stress tests may be good for the financial sector, they may be bad for the real economy.
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FLORENCE – The stress tests applied to American banks last year are widely credited with restoring financial stability in the United States and removing the fear that major financial institutions might fail. Europeans hope that the recent publication of the results of stress tests that were applied to their own banks will have the same effect. But, while the results of the tests may be good for the financial sector, they may be bad for the real economy. The financial crisis is over, but the age of general economic slowdown is only just beginning.