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Sir, Emma Dunkley reporting on BoE’s stress testing of banks writes: “The new “exploratory” test, which will be carried out every other year, will assess banks’ resilience to a wider range of risks beyond those emanating from the financial cycle — such as persistently low interest rates and high costs…The new assessment will include weak global growth, continuing low interest rates, falling world trade…”, “BoE set to raise the bar on resilience” March 28.

Again a stress test on how the banks might do because of the economy, but still with no regulator (or central banker) interested in stress testing how the economy might do, because of the banks.

When will a bank regulator ask whether banks are lending enough, and on sufficiently reasonable terms, to SMEs and entrepreneurs? The day he would have respond that with a definite “NO!” That day the regulator might begin to understand what damages his risk weighted capital requirements for banks cause the real economy.

PS. Emma Dunkley also writes: “Last year, UK banks had £19bn of impairments on credit cards, compared with £12bn on mortgages.” That might be… but does no one look at the risk premiums involved in both cases?

@PerKurowski