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| Bank of England governor Mark Carney on Tuesday |
There’s an art to conducting stress tests if you’re a banking regulator that wants to take credit for bolstering financial system stability.
You want the tests to look really tough, but for most banks still to pass them. If too many large ones fail then that will simply spread investor panic and invite criticism of the regulator for not knocking banks into shape, but if the tests look too easy then both their pass marks and the examiner lose credibility.
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