Banks' Capital Stress Tests Could Prevent Financial Crises and Boost Stability
Banks need to have enough extra money on hand to handle tough times. To figure out how much they need, researchers used a simulation to test if banks have enough money set aside for emergencies. They looked at how banks' money changes based on the economy and how likely it is for their rating to change. By doing this, they found out how much extra money banks should have to be safe.