European banks' asset quality review and stress test should be conducted by mid-2014, before the European Central Bank takes over banking supervision, Executive Board member Yves Mersch said Friday.
"The SSM could undertake the asset quality review in the third quarter of this year until the first quarter of next year, and then in close cooperation with the EBA, conduct a stress test," Mersch said in a speech in London.
The outcomes of the balance sheet assessment will be a major input for the stress tests. The combined results of both exercises could be published by mid-2014, just before the Single Supervisory Mechanism is scheduled to become operational, Mersch said.
"A single supervisor without a resolution counterpart, however, would push the central bank into ever more risk-taking to ensure financial stability, thus even threatening the independence of monetary policy," he said.
Earlier on Thursday, the European Banking Authority recommended asset quality reviews on major EU banks, which will delay the next stress test until 2014.
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