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Fed finalizes stress test changes to improve transparency and cut volatility

The Federal Reserve said the rule updates aim to preserve the stress test’s resilience while reducing swings in capital requirements tied to the results.

Reported · Written up by our desk · Central Banks

The Federal Reserve Board finalized changes intended to improve the transparency and public accountability of its bank stress test and reduce volatility in capital requirements linked to the test, according to a Fed release.

The Fed said the two final rules are largely similar to proposed rules issued in 2025, and it also asked for public comment on a separate proposal designed to better reflect differences in banks’ business models that generate fee income.

The central bank said its stress tests are used to ensure large banks remain sufficiently capitalized to keep lending to households and businesses even in a severe recession.

In a December 2024 announcement, the Fed said it would modify the test to improve its resilience, and Vice Chair for Supervision Michelle W. Bowman said the finalized changes preserve that resilience.

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