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Bank's stress tests 'worse than useless'

By Ben Woods

The Bank of England's stress tests are "worse than useless", according to a report claiming British banks would buckle under the strain of a major economic shock.

A study by the Adam Smith Institute said the Bank's stress tests are like a "ridiculously easy exam with a ludicrously low pass rate", which disguises the ability of UK banks to cope with an economic blow on the scale of the 2008 financial crisis.

The report, which pinpoints 13 flaws in the stress test, said every single UK lender would currently fail "more rigorous" stress tests by the US Federal Reserve.

It fears that the UK is "sailing blindly into a second global financial crisis" and has called on the stress tests to be scrapped.

Kevin Dowd from Durham University, who wrote the report, said: "The purpose of the stress testing programme should be to highlight the vulnerability of our banking system and the need to rebuild it."

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