Bank stress tests

Bank stress tests are tests that banks do to make sure that they have enough money to cover any unexpected losses. Banks create different possible scenarios such as a sudden rise in interest rates, a drop in the stock market or a recession, and then see how their money and resources could be affected. They can also use stress tests to check if they meet certain legal requirements. In the end, it gives a clear picture of the bank's financial health and helps them manage risk better.