Stress test(redirected from valgus stress test)
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Related to valgus stress test: varus stress test
Tests conducted by federal supervisory agencies in early 2009 to estimate the range of possible future losses among US banks and determine if they have sufficient capital buffers to withstand the impact of a severe recession. The stress test involved two scenarios, a base scenario and a worst case scenario.
A simulation measuring the capital adequacy of a bank. A government conducts a stress test to attempt to ensure that a bank can remain solvent in a crisis. The term came to prominence in 2009 and 2010 when the U.S. Treasury conducted stress tests of bailed out banks before it allowed them to repay Treasury loans.