The Banque de France, the Autorité de contrôle prudentiel et de résolution (ACPR) and the Autorité des marchés financiers (AMF) are jointly conducting an exploratory system-wide stress test for the first time.
It aims to understand how insurers, asset managers and banks interact in the event of severe market stress and to identify transmission channels and second-round effects that sector-based stress tests fail to capture.
In a note on its website, the ACPR said “two developments call for a more integrated approach to financial stability supervision”.
“On the one hand, the growth of global non-bank financial intermediation (NBFI) has complicated interconnections and increased interdependencies between players. This dynamic is not observed in France, where the domestic NBFI has accounted for a stable share of around 30% of the financial sector over the past twenty-five years. On the other hand, several recent episodes of stress have highlighted the potentially destabilising nature of a systemic liquidity stress, which sometimes needs to be understood for its own sake and not as the only symptom of a solvency difficulty: the dash for cash of March 2020, at the start of the Covid-19 pandemic; the Archegos losses in March 2021; the energy market tensions in late 2021 and 2022, following Russia’s invasion of Ukraine; the UK sovereign bond (gilts) crisis of September 2022.”
The exercise will bring together 25 voluntary institutions – five banking groups (including all global systemically important banks established in France), nine insurance groups, ten asset management companies and one clearing house - to ensure broad and representative coverage of the sectors concerned.
A final summary report is expected by the end of 2026.
