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Chair of European Parliament’s Economic and Monetary Affairs Committee comments on new bank stress tests

May 11, 2011 4:03 PM

Last night's debate on stress tests of the EU banking sector in the European Parliament saw the Alliance of Liberals and Democrats forEuropecalling for more transparency of the banking sector due to its close connection to the sovereign debt crisis.

Sharon Bowles MEP, who chairs the European Parliament's Economic and Monetary Affairs Committee, said:

"We have repeatedly said bank stress tests must be credible, robust and transparent. Now these new stress tests are improved under the European Banking Authority (EBA), but there are still issues being avoided due to prevarication by Member States. It is about time the message sunk in that feeble political will is not the answer to this crisis and makes solutions more expensive.

"The stress tests are provoking a reaction from the banks which are seeking additional capital, while some Member States are being proactive in pushing banks to raise capital, but there is no overall plan to address undercapitalisation. This does not stack up - surely one thing we have learned in the crisis is that we are interconnected. If banks do not trust one another and the interbank lending is frozen, we have a big problem so we must have proper disclosure and coordination of the response".