Montagner urges faster stress tests and system-wide risk checks
Patrick Montagner, a European Central Bank (ECB) Supervisory Board member, called for faster, targeted stress tests alongside EU-wide exercises. He spoke at a European Systemic Risk Board (ESRB) workshop in Kraków on October 23, 2026.
Beyond a single capital estimate
Montagner said EU-wide stress tests must retain comparability and quality assurance because they inform supervisory capital assessments and Pillar 2 guidance.
Their constrained balance sheets and three-year horizon limit their representation of crises.
The ECB's 2022 climate exercise exposed gaps in data, methods and governance; its 2024 cyber test examined recovery and continuity of essential services.
In 2026, banks designed geopolitical scenarios depleting Common Equity Tier 1 ratios by at least 300 basis points.
The exercise exposed insufficiently granular assessments, weak translation into solvency and liquidity metrics and management actions that were not always credible.
Simultaneous asset sales or funding requests can undermine those actions.
Following risk across sectors
The ESRB has launched a project to develop a desktop-based system-wide stress test by 2028.
Montagner cited the ECB's 2025 contagion exercise and British and French system-wide tests as foundations for further work.
He called for assessments of common exposures, collateral calls and liquidity feedback across banks and non-banks.
Artificial intelligence investment illustrates the challenge: overlapping equity, credit and collateral assumptions can transmit a reassessment across sectors.
Exposure mapping and targeted sensitivities would precede elaborate loss estimates.
Precision has its limits
Montagner warned that greater scenario complexity can create a false sense of precision.
Comparable capital tests, bank-specific exercises and system-wide assessments serve different purposes.
He advocated focused exercises that expand as data and methods improve, rather than one comprehensive model.