There's misinformation about the EU's plan to stress test its banks to see how stable they'll be if the economy turns south again.
First of all, the stress tests will be conducted by individual countries through their respective regulators, not by the European Central Bank or any central body.
The ECB president Jean-Claude Trichet made this clear when I interviewed him on June 18th. You can see most of the interview here but his comments about stress tests are published here for the first time.
Q: "Are these new stress tests and will there be a uniform standard applied from a central regulatory body or will this be conducted by national regulators."
A: “We are working on that. It is coordinated at the level of the body which is responsible for the coordination of the 27. We ourselves at the ECB are in very close connection with the CEBS (Committee of European Banking Supervisors) which is the name of this body. And of course it is at the level of each national supervision authority that it is conducted and so I think it was a very good decision of the Europeans to be public on this test."
Q: "Are we talking about a new stress test?"
A: "This is a test which had been started at the level of CEBS and we will ensure, they will ensure, we will all ensure that it is exactly coordinated at the level of Europe as a whole. I expect we will have appropriately coordinated parameters and working assumptions in order to have this publication of individual stress test."
Q: "And what will you do if problems are revealed?"
A: "I mean it’s up to each particular country. As I said it is run at the level of each particular nation but on a coordinated basis but the responsibility, you know, in terms of banking surveillance is the responsibility at the level of the nations concerned."