Professor Patrick Honohan:

Yes. So, an important distinction that I'd make is between the stress ... between stress tests, which start from the presumption that you will know what will happen in a base case and then you say "What happens if things are much worse than we currently believe?" That exercise requires you to know how ... you say "Well, does much worse mean?" You'd have to define an economic situation. GDP will fall, inflation will rise, inflation will fall ... some scenario and then work out what will that mean for the bank's profit and loss. But the much more important element and the element that wasn't included in the stress tests of the early 2000s was an "as is" assessment. An "as is" assessment of the recoverable value of the loans, not just the accountants' value of the loans, which is based on accounting conventions but isn't really forward looking and this asset quality review dimension, which we started to bring in a very broad aggregative way in 2010 and then, when the BlackRock people were here, in a more detailed loan-by-loan basis. That is what makes a difference and that is what is the linchpin of the ECB's approach and I think we contributed to that in discussions in the ECB during 2013 to their design of that, that they now have as a centrepiece the asset quality review with the stress test dimension being a sort of secondary. Another reason the stress test is secondary is, you take one scenario, this will be a bad scenario and you might have time to take two scenarios, that scenario. But you can't imagine all bad scenarios that could happen. Some scenarios will be good for some banks and bad for others. What if the scenario is, oil prices go up ... well, that might be good for some. What if oil prices go down? That is also bad for people. So, yes, the short answer is yes, we have done a lot more and there are many other calculations that we can do in the background but it's okay.