European Banking Authority turns to disclosure to save latest stress tests: Part II

Regular readers will recall that the European Banking Authority turned to disclosure to try and save the latest stress tests.

As predicted by this blog under the FDR Framework, the disclosure is useful for market participants.  They are using the disclosure of sovereign exposures to estimate the amount of capital each bank will need under a plan to recapitalize the Eurozone banks.

As for the stress tests themselves.  They have been discredited by the collapse of Dexia, a bank that passed the test.