China has just ordered banks to stress test themselves in the event of a 60% drop in house prices, according to Bloomberg News. Citing “a person with knowledge of the matter”, Bloomberg said that banks have been asked to stress test the possibility of a 50% to 60% drop in house prices in areas where housing costs have risen excessively. The request is also dramatically higher than an earlier bout of stress tests conducted last year, which included a 30% drop in housing costs. It is difficult to gauge the impact on this report, but it could spark some risk aversion if the markets chose to run with it (ie, a stronger USD and yen. Neither currency seems to have reacted to the news so far.