FSA wants tougher stress tests

As the FSA here in Britain announces new - tougher - stress markers for UK banks we can only hope that the underlying economic model holds up in case another economic crisis hits the banking system. We all know what happened to the Value-at-Risk Model - it was less than useful when it was needed most. The problem with stress-tests in banking is that it is impossible for the banking system as it is at present to provide for every conceivable disaster scenario as that would mean that ultimately the banks would have to hold all deposits 100 per cent in cash.