The CBFSAI initiated stress testing not only for credit, (4) exchange rate, interest rate and equity-related risks, but also for liquidity risks (Kearns, 2006).
The CBFSAI is also participating in a euro area initiative to collect information on Financial Vehicle Corporations.
Given the liquidity problems in the interbank market and despite establishing that liquidity risks are low in the stress-testing exercises, the CBFSAI has asked banks to report weekly on their liquidity situation and receives regular updates on liquidity contingency plans.
The CBFSAI is a highly respected institution and the Irish regulatory framework got high marks in IMF reports (IMF, 2006).
In this respect, the CBFSAI has established a work programme that, inter alia, follows up on suggestions by the IMF's FSAP report.
CBFSAI (Central Bank & Financial Services Authority of Ireland) (2005), Financial Stability Report 2005, Dublin.
CBFSAI (2006), Financial Stability Report 2006, Dublin.
CBFSAI (2007), Financial Stability Report 2007, Dublin.
2006), "Top-down Stress Testing: the Key Results", in: CBFSAI (2006), Financial Stability Report 2007, Dublin.
2007), "A Financial Stability Perspective on Irish Banks' Foreign Business", in: CBFSAI (2007), Financial Stability Report 2007, Dublin.
2007), "Credit Institutions Operating in the Irish Market: Their Exposures to Hedge Funds, Private Equity and the Subprime Sector", in: CBFSAI (2007), Financial Stability Report 2007, Dublin.