Central Banks
Fed’s Barr Says Banks Need Broader Stress Tests to Expose Risks
- Fed developing more than one ‘exploratory’ scenario in tests
- Vice chair for supervision spoke Thursday at Boston Fed
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The Federal Reserve’s head of supervision wants to broaden the scenarios in annual stress tests to gauge whether big banks can weather shocks and still keep lending.
This year’s health check featured an “exploratory market shock” to the trading books of the eight biggest banks that involved greater inflationary pressure and rising interest rates. Now, Vice Chair for Supervision Michael Barr says he wants to include more than one such hypothetical scenario in coming tests, starting next year.