FDIC released the hypothetical economic scenarios for use in the upcoming stress tests for covered institutions with total consolidated assets of more than USD 250 billion. The supervisory scenarios include baseline and severely adverse scenarios. FDIC coordinated with FED and OCC in developing and distributing these scenarios.
The baseline scenario is in line with a survey of private sector economic forecasters. The severely adverse scenario is not a forecast, rather, it is a hypothetical scenario designed to assess the strength and resilience of financial institutions. Each scenario includes 28 variables, such as gross domestic product, the unemployment rate, stock market prices, and interest rates, and covers domestic and international economic activity. The Dodd-Frank Act requires certain financial companies, including certain state non-member banks and state savings associations, to conduct stress tests. In 2018, Congress increased the size of a covered institution from USD 10 billion to USD 250 billion. Rules state that FDIC will provide scenarios to covered institutions by February 15 of each reporting year.
Keywords: Americas, US, Banking, Stress Testing, Stress Testing Scenarios, Baseline Scenario, Severely Adverse Scenario, Dodd-Frank Act, FDIC
Previous ArticleNBB Publishes Regulation on Extension of A Macro-Prudential Measure
HKMA announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.
BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.
ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.
ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.
EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).
SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.
US Agencies (FDIC, FED, and OCC) published a final rule that makes technical changes to the March 31, 2020 interim final rule that provides a five-year transition period for the impact of the current expected credit loss (CECL) methodology on regulatory capital.
ECB published results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets.
FINMA published guidance (06/2020) on extending or discontinuing various exemptions that were granted due to the COVID-19 crisis.
SRB launched a consultation on the minimum data needed for valuation of a bank in resolution.