First, of course, it is a means for assuring that large, complex financial institutions have sufficient capital to allow them to remain viable intermediaries even under highly stressful conditions. More broadly, supervisory stress testing and the associated review of capital planning processes have provided a platform for building out a regulatory framework that is more dynamic, more macroprudential, and more data-driven than pre-crisis practice.
One of the distinguishing features of the past two years is that the shocks have been highly asymmetrical. In 2020 and 2021 there was a huge increase in demand for goods and a decline in demand for services.