Featured Product

    FED Releases Scenarios for the 2021 Stress Tests for Banks

    February 12, 2021

    FED released hypothetical scenarios for the 2021 stress tests for banks. The published hypothetical scenarios are Baseline and Severely Adverse scenarios, with each scenario including 28 variables covering domestic and international economic activity. This year, 19 large banks will be subject to the stress test, though smaller banks that are on a two-year stress test cycle can opt in to the test this year by April 05, 2021. FED also published a table that shows the components that would apply to each bank and identifies the banks that are on a two-year cycle, based on data as of September 30, 2020.

    Both the published scenarios start in the first quarter of 2021 and extend through the first quarter of 2024. The baseline scenario follows a profile similar to average projections from a survey of economic forecasters. The severely adverse scenario follows the Policy Statement, of FED, on the Scenario Design Framework for Stress Testing and is characterized by a severe global recession accompanied by a period of heightened stress in commercial real estate and corporate debt markets. The severely adverse scenario describes a hypothetical set of conditions designed to assess the strength and resilience of banking organizations to an adverse economic environment. In addition, banks with substantial trading or processing operations will be tested against the default of their largest counterparty.  The stress tests of FED help ensure that large banks are able to lend to households and businesses even in a severe recession. Last year, FED found that large banks were generally well-capitalized under a range of hypothetical events; however, due to continuing economic uncertainty, FED had placed restrictions on bank payouts to preserve the strength of the banking sector.

     

    Related Links

    Keywords: Americas, US, Banking, Stress Testing Scenarios, Stress Testing, Baseline Scenario, Severely Adverse scenario, Basel, FED

    Featured Experts
    Related Articles
    News

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News
    News

    EP Reaches Agreement on Corporate Sustainability Reporting Directive

    The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).

    June 21, 2022 WebPage Regulatory News
    News

    PRA Consults on Model Risk Management Principles for Banks

    The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.

    June 21, 2022 WebPage Regulatory News
    News

    EC Regulation Amends Standards for Calculating Credit Risk Adjustments

    The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    June 21, 2022 WebPage Regulatory News
    News

    HKMA Announces Launch of Data Repository on Sustainable Finance

    The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.

    June 21, 2022 WebPage Regulatory News
    News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News
    News

    EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.

    June 17, 2022 WebPage Regulatory News
    News

    NGFS Report on Integration of G-Cubed Model into NGFS Scenarios

    The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.

    June 17, 2022 WebPage Regulatory News
    News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News
    News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8301