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BERLIN, July 3 (Reuters) – European regulators oppose including a monarchical default scenario in stress tests they are conducting on banks, German receptacle Der Spiegel reported on Saturday.

Without naming its sources, the intelligence weekly said regulators opposed such a scenario because they felt it would put in action doubts over the effectiveness of Europe’s bailout mechanism, which was assortment up to aid states if they are shut out of credit markets.

Instead, the magazine said regulators were looking into how banks would react to rising prices in credit default insurance on sovereign debt.

Europe’s banking watchdogs be under the necessity been running the tests to see how lenders would be pretending by a sharp downturn in the economy or other shocks, aiming to boost firmness and bring a negative spiral in financial markets to a stop.

(Reporting by Brian Rohan; Editing by Susan Fenton) Keywords: GERMANY STRESSTEST/

(brian.rohan@reuters.com ; +49 30 2888 5223; Reuters Messaging: brian.rohan.reuters.com@reuters.unadulterated )

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