Draft Regulatory Technical Standards (RTS) specifying the range of scenarios to be used in recovery plans

These draft RTS intend to specify the range of scenarios to be designed by financial institutions when testing their recovery plans. Given that the design of the appropriate scenarios depends on the specificities of each institution (activity, size, interconnectedness, business and funding model, etc.), the RTS attribute to institutions the responsibility of selecting relevant scenarios and to national supervisors the task of assessing the adequacy of the chosen scenarios.

However, the RTS provides a number of relevant events which need to be considered by banks when designing the most appropriate scenarios. Moreover, the RTS also require at least three scenarios to be used: one covering a system-wide event, one covering an idiosyncratic event and one covering a combination of both types of events.