Federal Reserve Board releases the hypothetical scenarios for its annual stress test

For release at 4:30 p.m. EST

February 05, 2025

The Federal Reserve Board on Wednesday released the hypothetical scenarios for its annual stress test, which helps ensure that large banks can lend to households and businesses even in a severe recession. Additionally, the Board released two hypothetical elements designed to probe different risks through its "exploratory analysis" of the banking system. The exploratory analysis will not affect bank capital requirements.

The Board's annual stress test evaluates the resilience of large banks by estimating losses, net revenue, and capital levels—which provide a cushion against losses—under hypothetical recession scenarios that extend two years into the future. This year, 22 banks will be tested against a severe global recession with heightened stress in both commercial and residential real estate markets, as well as in corporate debt markets. The scenarios are not forecasts and should not be interpreted as predictions of future economic conditions.

https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250205a.htm