Watchdogs Should Incorporate SRTs Into Stress Tests, BIS Says

🇨🇭 Bloomberg (CH) —

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The Bank for International Settlements has published a paper recommending that financial regulators incorporate synthetic risk transfers (SRTs) into system-wide stress tests to better evaluate the potential risks these instruments pose. The BIS argues that current stress testing frameworks may not adequately capture the systemic vulnerabilities associated with SRTs. The recommendation reflects growing regulatory attention to complex financial instruments in the banking sector.

Financial watchdogs should consider including synthetic risk transfers in system-wide stress tests to better assess potential risks from the instruments, according to a paper published by the Bank for International Settlements.

Politics Markets synthetic risk transfers stress tests BIS financial regulation banking systemic risk watchdogs

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