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		</div><p><a href="http://londonglossy.com/wp-content/uploads/2010/12/darling-call-on-bank-stress-tests.jpg"><img class="alignnone size-full" title="Alistair Darling said banks should face additional stress tests" src="http://londonglossy.com/wp-content/uploads/2010/12/min-darling-call-on-bank-stress-tests.jpg" alt="Alistair Darling said banks should face additional stress tests"/></a></p>
<p>The European Commission urgently needs to carry out thorough stress tests on banks in the wake of the Irish bail-out, former chancellor Alistair Darling said.</p>
<p>Financial regulators also need to be much more vigilant and monitor banks on a daily basis to ensure they are not taking undue risks and can withstand defaults, Mr Darling said.</p>
<p>He said the austerity measures imposed by governments in countries like Greece meant growth was unlikely and this posed a real risk to the wider banking system as they may not be able to service their debt, let alone repay it, the Labour MP told Radio 4&#8217;s Today programme.</p>
<p>He said he warned in the summer that the European Commission&#8217;s stress test for banks to see whether they could withstand defaults on loans was &#8220;completely ignoring&#8221; the connection between banks from different countries.</p>
<p>Mr Darling said: &#8220;I think it&#8217;s a matter of principle that the eurozone countries should be responsible for supporting the euro but that only gets us so far down the road.</p>
<p>&#8220;I think there are two problems that the eurozone has not dealt with. We do have an interest here, though not a direct financial interest, but a clear interest.</p>
<p>&#8220;One is the strength of the banks and I think the European Commission now needs to urgently re-do these stress tests and do them properly.&#8221;</p>
<p>Mr Darling said the Financial Services Authority had &#8220;learnt an awful lot&#8221; from the banking crisis but it needed to be &#8220;vigilant&#8221;, adding that the Irish banks were protesting until just before the bail-out was announced that they had enough capital.</p>
<p>He said: &#8220;When you are asking whatever bank, whether it&#8217;s strong enough to withstand defaults from whatever source, you have got to be asking that every day, not just periodically. </p>
<p>&#8220;Banks clearly have a duty to satisfy themselves that the bank can withstand stresses that it might be exposed to but experience here and in other countries shows that isn&#8217;t enough. You have got to get the regulators to ask some pretty tough questions.&#8221;</p>
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