With regard to capital adequacy, the Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR) is designed to ensure that large U.S. bank holding companies, including the LISCC firms, have rigorous, forward-looking capital planning processes and have sufficient levels of capital to operate through times of stress, as defined by the Federal Reserve’s supervisory stress scenario.
In our overall assessment, highly-leveraged firms and commercial real estate corporations may entail significant risks to euro area financial stability not only because of potential asset price reversals, but especially because several euro area large and complex banking groups have large lending and investment exposures to these corporations. Developments in these sectors therefore need to be closely monitored in the period ahead.