Over the course of the last 18 months, I have heard overwhelmingly—from academics, from think tanks of every stripe, from banks of every size, from regulatory colleagues both domestic and foreign— that stress tests should continue to be a key element of the Federal Reserve’s supervision of systemically important banks and a key aspect of the Fed’s efforts to promote financial stability.
Stress tests should be regular, rigorous, and dynamic. And the banks’ performance on these tests will continue to be the most risk sensitive and consequential assessment of the affected banks’ capital requirements. Transparency around the stress testing process and results was a fundamental principle of the first stress test and every one that has followed, and it will remain a primary goal.