Document Type
Article
JEL Codes
G01, G28
Abstract
Ten years after the Federal Reserve’s crisis-era bank stress test, it is time to recalibrate the stress tests for “peacetime.” Outside of a crisis, supervisors should tailor stress tests to focus on their comparative advantages by taking a macroprudential focus, with severe scenarios that enable them to learn about emerging risks in both traditional and shadow banking sectors. In peacetime, also, supervisors should emphasize risk- management practices and be wary of forcing rapid changes in capital levels for individual banks, while linking stress-test results with countercyclical capital buffers across the system.
Recommended Citation
Feldberg, Greg and Metrick, Andrew
(2021)
"Stress Tests and Policy,"
Journal of Financial Crises: Vol. 3
:
Iss. 1, 1-19.
Available at:
https://elischolar.library.yale.edu/journal-of-financial-crises/vol3/iss1/1
Date Revised
2021-04-16
Included in
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