Norway’s Financial Supervisory Authority’s (Finanstilsynet) stress test shows that Norwegian banks would suffer during a monetary policy crisis with a sharp rise in interest rates and a sharp rise in prices.
In the scenario that Finanstilsynet has played out, banks would run significant deficits. The capital adequacy of the banks would fall from 19% to 10%.
“Finanstilsynet’s stress test shows the importance of the banks maintaining the solvency that has been built up in recent years,” Finanstilsynet director Morten Baltzersen noted.
He emphasized that the stress test scenario is neither the most probable nor a development that Finanstilsynet believes will occur.
“The stress test represents a severe shock. However, it is not an unlikely scenario in Norway,” Baltzersen added.
Source: © NTB Scanpix / #Norway Today / #NorwayTodayFinance
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