Federal Reserve to Keep Large Bank Capital Requirements Unchanged Through 2026, Proposes Stress Test Overhaul

Deep News06:00

The Federal Reserve announced on Wednesday that it will not alter the capital requirements for large banks during the 2026 stress testing cycle, as it considers several adjustments to this annual examination to enhance its transparency.

Fed Vice Chair for Supervision Michael Barr indicated that the "stress capital buffers" for major banks will be recalibrated in 2027, providing the central bank sufficient time to identify any potential "flaws" in the models used to assess the financial health of large institutions under hypothetical economic downturn scenarios.

The Federal Reserve had voted last October to seek public feedback on both the models used in its tests and the specific economic scenarios applied annually to evaluate banks.

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