The Federal Reserve Board requested comment on a proposal to reduce year over year volatility in large banks’ capital requirements that stems from annual supervisory stress test results, marking the first of several stress test changes it signaled in December. The proposal would average stress test results over two consecutive years when calibrating the stress capital buffer (SCB), and would move the SCB’s annual effective date to 1 January from 1 October to give banks more time to adjust to updated requirements. It also includes targeted changes intended to streamline stress test related data collection, and is not designed to materially change overall capital requirements. The Board indicated it intends to propose additional measures later in the year to improve stress test transparency, including disclosing and seeking comment on the models used to estimate stressed losses and revenue and enabling public comment on annual stress scenarios before they are finalized. Comments on the current proposal are due 60 days after publication in the Federal Register.
Federal Reserve Board 2025-04-17
Federal Reserve Board consults on averaging stress test results and delaying the stress capital buffer effective date to reduce capital volatility
The Federal Reserve Board proposed changes to reduce volatility in large banks' capital requirements by averaging stress test results over two years and shifting the stress capital buffer's effective date to 1 January. The proposal aims to streamline data collection without materially altering capital requirements. Additional measures to enhance stress test transparency are expected later this year.