The stress tests of the future—5 and 10 years from now—will need to continue to ensure that banks remain able, even in a severe downturn, to provide the credit that households and businesses depend on. As financial institutions and the financial system evolve, stress testing will need to keep up.
When the next episode of financial instability presents itself, it may do so in a messy and unexpected way. Banks will need to be ready not just for expected risks, but for unexpected ones. Thus, the tests will need to vary from year to year, and to explore even quite unlikely scenarios.