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Economy
Apr 18, 2026

Washington War Game Unites US, UK and EU Central Bank Leaders to Simulate Lehman‑Style Bank Failure

AI Summary
Senior officials from the US Federal Reserve, the European Central Bank and the Bank of England will convene in Washington for a closed‑door “desktop” stress test, rehearsing a coordinated response to a potential collapse of a globally systemically important bank. The exercise, timed with the IMF and World Bank spring meetings, also addresses rising financial‑stability threats from advanced AI models, private‑credit risk and geopolitical market shocks.

The heads of the United Kingdom, United States and European Union central banks and treasuries are set to join a high‑level war game in Washington on Saturday, designed to probe how they would manage the failure of a globally significant bank.

Participants include senior officials from the US Federal Reserve, the European Central Bank and the Bank of England, whose governor Andrew Bailey also chairs the Financial Stability Board. Their presence underscores the seriousness with which regulators are treating cross‑border coordination.

The exercise is a “desktop” stress test conducted behind closed doors at the Federal Deposit Insurance Corporation (FDIC) headquarters. It will simulate a Lehman Brothers‑style collapse and test the joint response mechanisms of the three jurisdictions.

Holding the drill during the International Monetary Fund and World Bank spring meetings provides a rare opportunity for the officials, who are already gathered in the capital, to engage in face‑to‑face scenario planning.

Regulators have warned that the financial system faces new strains from artificial‑intelligence advances, risky private‑credit lending and market volatility linked to the US‑Israel conflict over Iran. In particular, the latest AI model from US firm Anthropic, called Mythos, has been flagged for its ability to uncover vulnerabilities in IT systems, raising concerns about cyber‑related financial shocks.

Bank of England Governor Andrew Bailey emphasized the urgency, stating, “It is a very serious challenge for all of us. It reminds us how fast the AI world moves.” His remarks highlight the intersection of technological risk and traditional banking stability.

The FDIC described the event as a “trilateral principal level exercise” aimed at coordinating resolution strategies for global systemically important banks (G‑SIBs). While the agency did not disclose the specific scenarios, it stressed that the drill would enhance each jurisdiction’s understanding of resolution regimes, strengthen cross‑border coordination, and bolster confidence in orderly bank resolutions.

Since the 2008 Lehman collapse, such stress‑testing simulations have become routine among regulators, serving as a preventive measure against repeat systemic failures.

By convening senior policymakers and central bankers for this war game, authorities hope to sharpen their collective response toolkit, ensuring that any future bank failure can be managed swiftly and with minimal disruption to the global economy.