BoE Stress Test To Gauge Response To 37% Hit To Economy

Law360, London (January 20, 2021, 12:02 PM GMT) -- The Bank of England published revised scenarios and timetables for its annual 2021 stress test on Wednesday after last year's exercise was canceled amid the COVID-19 crisis.

The central bank said the stress tests, which use hypothetical scenarios to evaluate how well lenders would be able to withstand a crisis, will measure finance firms against a fictional crisis in which GDP falls by £800 billion ($1 trillion) — a massive 37% contraction on 2019's figures — between 2020 and 2022. Unemployment also peaks at 12% in the exercise.

Banks will have to submit some of their projections in April rather than the...

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