European regulators oppose including a sovereign default scenario in stress tests they are conducting on banks, German magazine Der Spiegel reported on Saturday.
Without naming its sources, the news weekly said regulators opposed such a scenario because they felt it would raise doubts over the effectiveness of Europe's bailout mechanism, which was set 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 have been running the tests to see how lenders would be affected by a sharp downturn in the economy or other shocks, aiming to boost confidence and bring a negative spiral in financial markets to a halt.
(Reporting by Brian Rohan; Editing by Susan Fenton)