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The European Central Bank, the lead crisis-fighter for the 18 countries that use the euro, is embarking on an extensive search through the books of the biggest banks. It’s an arcane exercise — but one whose results will affect jobs, businesses, and lives. The idea is to restore the system’s ability to lend by weeding out lame banks.
Previous efforts in 2009, 2010, and 2011 — by other EU offices with fewer powers — did not do the job. Some banks passed simulated “stress tests” on paper but needed bailouts soon afterward. So the central bank is putting its reputation on the line.
Together with national regulators and the European Banking Authority, the central bank will first go through thousands of files from 128 of Europe’s largest banks. That will be followed by stress tests.
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