Europe's Stress Tests Fail Again

In its latest round of bank stress tests, Europe has missed another chance to undertake the honest reckoning that its financial system needs. If the continent's leaders want to strengthen their faltering economies, this charade must end.

The exercise, the first since 2014, is supposed to ensure that Europe's banks can weather a severe crisis. This means probing their main weakness: their shortage of loss-absorbing equity capital. Lack of capital has hindered lending, undermined the European Central Bank's stimulus efforts, and made the whole financial system vulnerable.