We present a macroprudential stress testing framework. While traditional stress testing assesses the level of banks' capital adequacy relative to regulatory requirements through a hypothetical crisis, macroprudential stress testing assesses macroeconomic consequences of the impact of banks'...

We present a macroprudential stress testing framework. While traditional stress testing assesses the level of banks' capital adequacy relative to regulatory requirements through a hypothetical crisis, macroprudential stress testing assesses macroeconomic consequences of the impact of banks'...

For a period of time, climate change could increase firms' costs and reduce the value of their assets. If we assume that the composition of banks' lending remains constant, the increase in costs could increase the banks' losses. The risk of increased losses is very unevenly distributed between...