The ECB’s geopolitical stress test needs a price

Only a market can say how much it should cost to insure against losses from a geopolitical risk event, and none exists, argues academic In July, the European Central Bank announced the results of a thematic reverse stress test on geopolitical risk covering its 110 directly supervised banks. The design was elegant: rather than handing banks a scenario, the supervisor prescribed the outcome – namely, a depletion of Common Equity Tier 1 capital of 300 basis points – and asked each institution to work backwards to the geopolitical Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe You are currently unable to print this content. Please contact info@risk.net to find out more. You are currently unable to copy this content. Please contact info@risk.net to find out more. Copyright Infopro Digital Limited. All rights reserved.You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.If you would like to purchase additional rights please email info@risk.net Sorry, our subscription options are not loading right now Please try again later. Get in touch with our customer services team if this issue persists. New to Risk.net? View our subscription options If you already have an account, please sign in here. Comment Op risk data: Japanese restaurant payments firm swallows $700m loss Also: Bank of Baroda fraud filing, Wells’ Ponzi woes, and Swedbank’s Panama Papers payout. Data by ORX News 17 Aug 2026 Comment Private credit risk doesn’t have to be systemic to be serious Risk management leader outlines three cracks in the consensus that risk in the private credit sector is contained 04 Aug 2026 Comment Perpetual futures: when expiry disappears, governance is key Perps solve the futures roll problem, but run market-structure and regulatory risks, warns Vishal Gupta 03 Aug 2026 Comment Op risk data: Pentwater pays up for taking Avis shares for a spin Also: Romania’s Robor cop gets tough on benchmark rigging; Wamco’s cherry-picking squashed. Data by ORX News 17 Jul 2026 Comment EUR vs USD stablecoins is the wrong debate Market structure and regulatory cohesion is at the centre of the stablecoin liquidity evolution, says Flow Traders’ digital assets head 30 Jun 2026 Comment AI compute has a governance problem As exchanges move to launch compute futures, Vishal Gupta argues that the real test is not product innovation, but whether governance can keep pace 24 Jun 2026 Views Why do prices jump? After years of investigation, we still aren’t sure, says Jean-Philippe Bouchaud 17 Jun 2026 Comment Don’t mind the gap risk: regulatory treatment of credit repacks Gap risk in repackaging is not a credit valuation adjustment for Basel III capital purposes, argues senior quant Andrey Chirikhin 16 Jun 2026 Most read articles loading... Back to Top