Currency Analyst since 2010

EUR: results of the stress tests

The stress tests conducted by the ECB identified a total capital shortfall of 25 billion euro ($32 billion) as of the end of 2013. However, most of the lenders that failed the test have plugged capital gaps or satisfied the ECB with plans to shrink. That means that from a 25 billion-euro hole remains just 6.35 billion euro, and half of that is in Italy. No French, German or Spanish institutions were required to find more capital.

Analysts at ANZ claim that the stress tests should ease concerns about the health of euro-area banks, “and may provide support to risk assets and the euro.” In their view, with the stress tests now out of the way, the euro will be more responsive to the data, while the Australian dollar should continue to perform well.

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