Systemic banking stress tests are becoming a very influential indicator in contemporary European financial policies. These stress tests, conducted by the EBA and ECB, calculate the impact of a stressful macro-economic scenario on banks’ capital ratios. In doing so, they present themselves as an objective indicator of banks’ health. Indicators like these are often seen as technical measures, calculated by independent experts. As such, they have the ability to remove a problem from the realm of the political, and recast it in the neutral language of science (Rose & Miller, 2008) (Dreyfus & Rabinow, 1982).
As these regulatory indicators, such as the stress test, become more prominent governance tools, it is critical to question where they come from and how they are produced. Regulatory indicators do not ‘just calculate’ a numerical value. They select and simplify specific characteristics and render others invisible or irrelevant. As such calculation is a political act. It makes different entities comparable, by computing and reducing them to a single numerical value, and subsequently comparing them on a common scale. This process of transforming different qualities into a common metric is known as commensuration (Espeland & Stevens, 1998).
Despite some advocates’ claims, commensuration is no mere technical process, but a fundamental feature of social life. Commensuration can radically transform the world by creating new categories and backing them with the weight of powerful institutions. Commensuration changes the terms of what can be talked about and how we value. It reconstructs relations of authority, creates new political entities, and establishes new interpretative frameworks (Espeland & Stevens, 1998).
In this paper I explore the EU-wide systemic banking stress tests as a tool of commensuration. Through interviews with actors in all four of the Belgian banks included in the 2014 stress test and interviews in the consulting firms assisting them, I address the question: How are banks commensurated in this process and to what consequence?
