The Federal Reserve Board finalized the hypothetical scenarios for its 2026 supervisory stress test of large banks and voted to maintain current stress capital buffer (SCB) requirements until 2027, delaying recalculation of new SCBs until its models can incorporate public feedback. The final scenarios are substantially similar to those proposed in October. The 2026 exercise covers 32 banks and applies a severe global recession featuring heightened stress in commercial and residential real estate and corporate debt markets over a two-year horizon. In the scenario, the US unemployment rate rises nearly 5.5 percentage points to a peak of 10 percent, alongside severe market volatility, wider corporate bond spreads, and sharp asset price declines, including about a 30 percent drop in house prices and a 39 percent fall in commercial real estate prices. Firms with substantial trading or custodial operations must also incorporate a counterparty default component, and banks with large trading operations face a global market shock component, which includes two revisions intended to improve consistency across shocks and enhance plausibility. A supporting methodology note indicates an intention to generally use the 2025 stress test models with limited adjustments. New SCB requirements are planned to be calculated in 2027 using models updated based on public feedback, with the Federal Reserve also publishing its review of comments alongside the final scenarios.
Federal Reserve Board 2026-02-04
Federal Reserve Board finalizes 2026 stress test scenarios and keeps stress capital buffer requirements unchanged until 2027
The Federal Reserve Board finalized the 2026 supervisory stress test scenarios for 32 large banks, maintaining current stress capital buffer requirements until 2027 to incorporate public feedback into its models. The scenarios include a severe global recession with significant stress in real estate and corporate debt markets, a peak US unemployment rate of 10%, and substantial asset price declines.