Letter from ECB President and ESRB Chair to Ms Mairead McGuinness, European Commissioner for Financial Stability, Financial Services and Capital Markets Union, on stress testing

The European Systemic Risk Board (ESRB) has published a letter from the European Central Bank (ECB) President and ESRB Chair, Ms Christine Lagarde, to the European Commissioner for Financial Stability, Financial Services and Capital Markets as regards the „Assessment of the financial system’s resilience to stress in the transition to the EU’s 2030 goals for the reduction of greenhouse gas emissions“.
In this letter, Ms Lagarde confirms that the ECB „will engage in this assessment and cooperate with the European Supervisory Authorities (ESAs) on this one-off climate scenario analysis“. Additionally, Ms Lagarde confirms that the ESRB will develop – with the assistance of the Central Bank – the adverse scenario(s) for the stress test.
To recall, the European Commission had recently requested such assessment to identify any potential vulnerabilities in the financial sector and to understand how stress in the financial system could affect the transition to the 2030 goals. The exercise should go beyond usual climate stress tests to take into account contagion and other subsidiary effects. For more information on the requested stress tests, please refer to EventID 20122.