The Bank for International Settlements has published a working paper introducing a free, interactive liquidity stress testing toolkit covering nearly 13,000 commercial banks in more than 100 economies, with data from 2006 onward. It provides a common basis for comparing banks and banking systems using public balance sheets. The analysis finds that liquidity buffers have generally improved since Basel III’s introduction, but differences across and within banking systems remain substantial.
The toolkit applies three scenarios broadly calibrated to the Basel III liquidity coverage ratio, assessing whether cash raised from available assets would cover funding outflows over 30 days. Its central measure, the breakeven stress factor, identifies the multiple of the baseline shock at which a bank exhausts its liquidity. Users can compare results over time and adjust assumptions on asset haircuts, encumbrance and funding withdrawals to construct alternative scenarios.
The results support screening for structural vulnerabilities rather than predicting bank failures or replacing supervisory tests based on confidential data. Annual metrics did not clearly signal the imminent failures among banks affected by the 2023 turmoil, when deposit outflows in some cases exceeded the most severe scenario’s assumptions within days. The toolkit also does not model interactions between liquidity and solvency. Higher frequency data and broader coverage of nonbank financial intermediaries and exposure networks are identified as development priorities to address faster digital bank runs and the transmission of stress between sectors.