MNI: Fed Developing Extra Stress Test Scenarios, Barr Says

The Federal Reserve is developing additional scenarios to probe for weaknesses in large banks as part of its 2024 stress test, Fed Vice Chair for Supervision Michael Barr said Thursday.

The additional scenarios would examine various types of hypothetical economic and market stress and would be "exploratory" and not help set a firm's capital requirements, he said in a speech at a Boston Fed conference. More varied stresses could help identify underlying weaknesses and improve how regulators supervise large firms, Barr said.

"The stress test needs to continue to evolve. Introducing multiple exploratory scenarios—both for the broader macroeconomic scenario and the global market shock for trading banks—would be beneficial for supervising potential risks on bank balance sheets," he said.