Stress tests

Stress testing is used by Bank Al-Maghrib to assess the resilience of the banking system to extreme shocks.

This mechanism refers to several categories of stress tests:

1. Sensitivity stress tests: measure the impact of a credit, liquidity, market, interest rate or exchange rate shock on the balance sheet and/or solvency of financial institutions.
2. Interbank contagion stress tests measure the risk of spread of a bank’s failure to other banks through their bilateral interactions, and to the unsecured and collateralized interbank markets.
3. Cross-border stress tests: to assess cross-border contagion, evaluating the financial links between Moroccan banks and their subsidiaries located mainly in Africa.
4. Stress tests between banks and insurance companies: which assesses the risk of contagion arising from direct interconnections between banks and insurance companies. This is done by analyzing the matrix of direct interconnections arising from bilateral exposures between the insurance and banking sectors.
5. Macro-stress tests assess the capacity of the banking system to withstand shocks stemming from the macro-economic environment. These stress tests are carried out on the basis of an analysis of the national and international environment. The results are used to implement the necessary actions to reduce the effects of shocks if they occur.