The exercise follows many years of annual tests to assess the capital strength of the banks following the financial crash, but it marks a new phase where banks are not immediately forced to recognise and plug any new-found financial holes.
Some criticised earlier tests as too lenient -- Irish lenders, for example, were given a clean bill of health just months before the country almost went bust due to their difficulties. Greece's banks received a thumbs up as recently as last year before political turmoil prompted a fresh examination last week.
Fifty-three banks will be assessed in the latest round of checks, to be launched in February next year. The European Banking Authority, which sets the standards for the examination, said the process would challenge banks' capitalisation plans.
The London-based authority said it would also make it easier to compare the resilience of banks across the European Union. The European Central Bank will probe banks in 10 of the 19 countries using the euro.
Unpaid loans remain a problem for Europe's lenders, as economic growth in many countries grinds to a halt.
In Greece, the four top banks have more than 100 billion euros of credit that is at risk of not being repaid.
Earlier in the week, Daniele Nouy, the ECB's chief banks watchdog, gave a sense of the focus of supervision. She said the euro zone central bank wanted to ensure banks have viable business models and can manage 'non-performing' loans at risk of not being repaid, singling out property lending.
"The economic climate in the euro area poses challenges to banks' profitability," Nouy said. "We know that some of the banks within the euro area still face significant credit risk."
To see the list of banks being tested, see pages 93 and 94 in the following EBA document: https://www.eba.europa.eu/documents/10180/1259315/DRAFT+2016+EU-wide+ST+methodological+note.pdf
(Reporting By John O'Donnell and Francesco Canepa; Editing by Catherine Evans)
By John O'Donnell
