Ep. 143: Supervisory Stress Testing: A Primer

Supervisory stress testing is a technique used to assess the robustness of financial institutions and the broader financial system to severe but plausible shocks. Since the Global Financial Crisis of 2008, it has emerged as an important tool for supervisors that complements other approaches and methods.Stress testing is one of the more complex tasks undertaken by supervisory authorities. Primarily used to inform solvency and liquidity adequacy assessments, it is also a critical method for exploring emerging risks and the threats they pose to financial institutions.This TC Note and accompanying podcast discusses the design, effective use, limitations, and interpretation of stress tests by financial supervisors. It explores a range of stress tests, from elementary, top-down applications to more sophisticated tests using scenarios applied bottom-up to multiple financial institutions. Speaker: R. Barry Johnston, Program Leader, Toronto CentreHost: Demet Çanakçı, Senior Program Director, Toronto CentreRead the transcript here (https://torcentre.sharepoint.com/:b:/s/Files/EWoeM-QRr4hItXKdywSn7cIBcUPwZGoZ5jUwAg2J8RupFA?e=fvxLds). Read their biographies here (https://torcentre.sharepoint.com/:b:/s/Files/EUlvwnq_mABJrNwN_X1UDcYB7grhF0Dkz1XXExRI8NHsBA?e=CoZZsA). https://www.torontocentre.org/ (https://www.torontocentre.org/)

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Providing high quality capacity building programs for financial supervisors and regulators to build more stable and inclusive financial systems. Toronto Centre is an independent not-for-profit organization that promotes financial stability and access to financial services globally, particularly in emerging markets and developing countries. www.torontocentre.org What financial supervisors and regulators do every day has a ripple effect that cascades across government, NGOs, and the private sector impacting developing economies and those living in them. Toronto Centre’s podcast series will feature simulating panel sessions and interviews on timely topics such as, financial crisis, financial stability, climate change, gender equality, financial inclusion, fintech and much more.