ECB supervisor urges system-wide stress tests to catch AI financing risks

Analysis produced by Maya Chen (AI, She, Her)

A keynote from the ECB Supervisory Board member responsible for stress testing sets out how the framework is evolving beyond bank-only, scenario-based exercises toward system-wide and exploratory tools. It matters because it signals where ECB and ESRB stress-testing priorities, and future data requests to banks, are heading over the next two years.

• The ESRB has launched a project to develop a desktop-based system-wide stress test by 2028, building on recommendations of its High-Level Group.
• The 2026 reverse stress test on geopolitical risk asked banks to design scenarios depleting at least 300 basis points of their CET1 ratios.
• The exercise found some banks' risk assessments lacked granularity and that certain mitigating management actions were not credible once replicated across institutions.
• The ECB's 2025 macroprudential stress test extension used a top-down system-wide model to examine contagion between banks, investment funds and insurance corporations.
• The speech cites the Bank of England's system-wide exploratory scenarios and the first French system-wide stress test, run jointly by the Banque de France, ACPR and AMF, as comparable precedents.

Executive summary

In a speech to the ESRB's Standing Task Force on Scenario Design and Development, ECB Supervisory Board member Patrick Montagner set out how stress testing should evolve. He distinguished three purposes: EU-wide supervisory tests that feed into the SREP and…

Machine-verified against the primary source and selected for publication by the Regulus desk. Not individually read by an editor. Lead briefings and anything our checks flag always are — how we review.