Did ECB Stress Tests Restore Faith in European Banks?

The video discusses the credibility of stress tests for banks, highlighting the split opinion among investors. It covers the impact of deflation and geopolitical risks, particularly in Europe, and the ECB's stance on these issues. The discussion also touches on the credibility of stress tests, capital considerations, and the dynamics of supply and demand in credit markets. The ECB's Vice President, Constancio, addresses concerns about deflation and the potential for intervention if necessary.

Discuss the implications of banks passing the stress tests on their lending behavior.

What factors contribute to the lack of aggregate demand in Europe as mentioned in the text?