The CNB uses stress testing as a tool for assessing the resilience of financial institutions registered in the Czech Republic and of the financial system as a whole. The CNB applies both a top-down macro/aggregate approach and a bottom-up micro/individual approach to stress testing. Macro-stress tests assess the resilience of the banking sector and the pension management companies sector as a whole. Micro-stress tests assess the resilience of individual banks and insurance companies. In addition, the CNB performs stress tests of the public finances of countries to which domestic credit institutions have systemically important sovereign exposures and of households that have credit from domestic credit institutions. The scenarios for the individual stress tests are prepared by the CNB. In the case of insurance companies, the CNB also uses the scenarios prepared by the European Insurance and Occupational Pensions Authority (EIOPA) once every two years. The stress testing methodology is regularly revised and published in the CNB’s Financial Stability Reports and on the CNB website, mostly in the form of thematic articles or boxes. The stress tests are conducted at a regular frequency, usually yearly or half-yearly.
Stress testing methodology and results
- Banking sector
- Insurance sector and pension management companies sector
- Public finance sector