EU plans sweeping stress test of non-banks

EU regulators are set to conduct their first system-wide stress test of non-bank financial institutions, such as hedge funds and private equity, to assess vulnerabilities in the financial system amid concerns about the risks posed by less regulated entities. The initiative follows a similar exercise by the Bank of England and aims to understand how crises could affect various financial sectors, including pension funds and insurers. With non-banks accounting for roughly a quarter of Eurozone loans, regulators are increasingly focused on the potential risks these firms pose and the need for targeted regulation.

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