Fed Advances Stress Testing Reforms for US Bank Capital Rules

The Federal Reserve Board is advancing stress testing reforms to improve transparency and reduce volatility in U.S. bank capital requirements.

Starting from 2026, the Fed will seek public comment on hypothetical scenarios and disclose the framework, while moving to publish full model details, assumptions, and alternatives by 2027.

The changes aim to smooth stress capital buffer swings by averaging the two most recent stress test results, with an effective date shifted to January 1.

Vice Chair for Supervision Michelle Bowman says one final rule would require publication of equations, variables, coefficients, assumptions, limitations, and decision-making rationales for each stress test model.