EBA stress test to gird banks for long Covid depression

Real GDP projected to fall -12.9% from baseline by 2023

The European Banking Authority’s (EBA) 2021 stress test for banks is its most severe to date, with the worst-case simulation projecting a fall in GDP of -12.9% by 2023 relative to the baseline scenario. In contrast, the cancelled 2020 test’s adverse scenario – planned before the coronavirus crisis struck – projected an -8.5% relative drop.

The doomsday simulation includes the sorts of shocks expected should the current crisis worsen, for instance because of mutations to the virus, delays in the