Tests ignore sovereign bankruptcy

The criteria used in the stress tests for banks, though tougher that last year's, still ignore the real problems, the business newspaper Les Echos criticises: "They provide no answer to the most urgent question with respect to the European financial system; the impact on the Eurozone of one state going bankrupt. With their politically motivated decision not to break this taboo, those monitoring the banks have held up a distorting mirror to them. Efforts were made to simulate indirectly the risks of debt default on the banks' portfolios for state debt. With respect to the Greek debt crisis, the financial markets estimate losses of fifty percent whereas the tests limit this to twenty-five percent. In view of the forthcoming EU summit, which many see as crucial, that is doubtless too little."

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