Stress tests are a phenomenon that should raise questions directly: a banking regulator that conducts a publicly accessible stress test on bank´s financial statements. What incentive does a regulator have to see half of the banks it regulates fail? This façade has one objective: to increase trust in the banking sector. Unfortunately, the latest stress test last month turned out to be one miserable failure. “Only” three banks failed to pass the EU stress test: Banca Monte dei Paschi, Royal

Over the past decade the debate between active and passive investing has reached a climax. Passive investing simply means investing in a fund that buys all the stocks in an index, assuming stocks have a historical return at some level. Recent numbers prove that the camp in favor of passive investing has been making strides. However, the case for passive investing is dead wrong. The surge in passive investors will set us up for the biggest market crash in history.

While ECB-chairman Mario Draghi firmly continues buying up bonds (but for now decided to keep rates where they are and not increase the pool of eligible assets by relaxing the boundaries of its purchase program), an important question arises. Can a central bank go bankrupt? Central banks can certainly become insolvent or, in other words, have a negative equity with the value of their liabilities surpassing the value of their assets. Better yet, it is very likely that the coming years central bank will have to take enormous losses on its bond positions and that they will get into solvency troubles. The solution differs. In the meanwhile, central banks finance governments to an increasing degree.