The Bank of England’s Headline Stress Test: An Exercise in Really Weird Accounting

(For the previous blog in this series, see here.) This posting goes through the Bank of England’s headline stress test and explains that the reassuring conclusion that the Bank drew from them – that the UK banking system is in healthy shape – cannot be taken seriously because the Bank set the pass standard way […]

An Introduction to the Bank of England’s Stress Tests

This posting provides an introduction to the Bank of England’s recent stress tests on the UK banking system. It suggests that a stress test can be compared to a school exam: there is the exam paper or stress scenario and there is the performance of the candidate against a pass standard to determine whether the […]

New paper: Sound Money: an Austrian proposal for free banking, NGDP targets, and OMO reforms

Our new paper on nominal GDP targeting is out now. Below is part of the press release we sent to the media; for the full press release, click here. To read the whole paper, click here. The Bank of England should abolish the Monetary Policy Committee, use Quantitative Easing instead of interest rates to conduct […]

Stress Testing without the Stress – the Bank of England’s Stress Tests

This is the first of a series of postings on the Bank of England’s 2015 stress tests of the financial strength of the UK banking system, which concluded that the banking system is able to withstand a severe stress scenario and still function well. It turns out that the stress scenario – often described in […]

The FTSE 100 is entirely useful, as long as you know what you’re using it for

It’s entirely true that the FTSE100 is not a very good guide to the performance of the UK economy, as The Telegraph points out: To some degree that might be telling us that the economy is not quite as strong as it might look on the surface. But, more significantly, it is telling us that […]