The Bank of England, while testing the ability of lenders' balance sheets to withstand shocks, stated that the worst-case scenario for the COVID-19 crisis could result in a 37% collapse of the economy from pre-pandemic levels in 2019 by the end of 2022.
According to a statement issued by the bank, the 2021 stress tests differ from the usual stress testing goals carried out by the bank. This year, the bank aims to ensure that banks have enough capital to support an economy affected by the repercussions of COVID-19 in the event of unexpected deterioration levels. The bank added in the statement that this year’s focus will be on identifying the most appropriate ways for the banking system to continue supporting the economy in recovering from ongoing pressures.
