But I think it fair to say that supervisory stress testing and the CCAR have already made important contributions to financial stability and, in the process, have led the way in transforming supervision of the nation’s largest financial firms. First, they have played a key role in strengthening dramatically the capital position of the industry.
The firms participating in CCAR have more than doubled their tier 1 common capital since 2009, an increase of $ billion of additional, high-quality capital in the U.S. financial system. It is noteworthy that supervisors in other countries have themselves been moving toward greater use of stress tests as a centerpiece of efforts to build strong capital positions for their banks.