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FSA involvement predates the establishment of the EBA at the beginning of 2011. The FSA has been involved in both the technical level of the stress test design and implementation, in the governance of the EBA through FSA representation at the EBA Board of Supervisors and Board of Management, and through the secondment of an FSA stress test expert to the EBA Quality Assurance Task Force, to help ensure consistent application of the stress test across EU banks.
EBA decisions are made by the Board of Supervisors and inevitably involve some compromises to reach agreement. However, the FSA believes this year's EU-wide stress test is credible and robust, and, taken as a whole, is tougher than last year's Committee of European Banking Supervisors' stress tests, with a tough peer review process and a tighter definition of Core Tier 1 capital.
The FSA believes in the value of transparency and orderly disclosures of relevant risk information to the market on a comparable basis. The EBA stress test and risk exposure disclosure templates should help market participants to reach better informed and more balanced judgments about the relative risk and soundness of individual financial institutions.