Orr: Don’t rely on bank stress test outcomes alone

Sun, 13 Jan 2019

By Jenny Ruth Jan. 14 (BusinessDesk) - Reserve Bank governor Adrian Orr says stress tests of banks have inherent limitations, suggesting they shouldn’t be relied on. “We emphasise in our public articles that stress testing results should not be read at face value,” Orr says in a letter. “Both the significant modelling uncertainties, and the fact that the banks know how/when the stress situation ends, limits the value of stress tests,” Orr says. “Further, passing a stress test covering only dairy portfolios is not a meaningful indica...

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