The ECB Liquidity Stress Test 2019 - A comprehensive review of the exercise

The European Central Bank has included the assessment of banks’ resilience to liquidity shocks as one of its supervisory priorities for 2019. Accordingly, it launched LiST, the Liquidity Stress Test Exercise, a sensitivity analysis of liquidity risk, involving about 100 significant banks directly supervised under the Single Supervisory Mechanism.

The exercise will allow the Supervisor to assess the ability of each institution to survive  idiosyncratic stress scenarios calibrated in a prescriptive manner by the ECB.

This white paper gives an overview of the methodology and drivers behind the supervisory stress test of 2019.