Bank of England may toughen stress tests as economy picks up

London

THE Bank of England may consider using stress tests of differing severity to assess the resilience of the financial system as economic booms turn to busts, said Deputy Governor Jon Cunliffe.

A harsher scenario would be used as economic growth accelerates and risk builds up in the system, Mr Cunliffe said in a speech in London on Tuesday. When the economy weakens and there is less risk in the system, and looser bank lending is required, a softer scenario could be used, said Mr Cunliffe, who has responsibility for financial stability.