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Federal Reserve to seek public comment on wide-ranging stress-test proposal ahead of 2026 exercise
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Summary
An agency official at the 2025 Federal Reserve Stress Testing Research Conference said the Board will solicit public comment later this month on a comprehensive package of reforms to stress-testing models, scenario design and disclosures, ahead of the 2026 stress test.
An agency official speaking remotely at the 2025 Federal Reserve Stress Testing Research Conference said the Federal Reserve Board will solicit public comment later this month on a comprehensive package of changes to its stress testing program, including model descriptions, scenario design and disclosures ahead of the 2026 stress test.
The official said the reforms are intended to enhance the reliability and credibility of the stress-testing process and to reduce year-over-year volatility in results. "Going forward, the Federal Reserve is committed to transparency and ensuring that public input and stakeholder comment enhance the program over time," the agency official said.
The package, the official said, will provide detailed descriptions of the models used in the stress test, including assumptions and limitations for each model and the rationale for key modeling choices. The proposal will invite public comment on specific modeling changes planned for the 2026 stress test, including adjustments meant to address the sensitivity of pre-provision net revenue projections to recent bank performance and improvements to models related to credit losses, operational risk and securities.
The official also requested feedback on scenario design, saying the proposal will cover guidance that governs which variables are included in the severely adverse macroeconomic scenario and will describe the macroeconomic model used to generate paths for variables not governed by scenario guidance. In addition, the Board plans to disclose the global market shock framework "including the logic behind shock severity, liquidity horizons, and the description of the models generating these shocks," the official said.
"The proposal would also include details on the macroeconomic model used to formulate the paths of the variables that are not determined by a guide for a given annual scenario," the official added, and said the Board will solicit comment on the specific severely adverse scenario it intends to use for the 2026 stress test.
The speaker closed by recognizing the work of stress-testing staff at the Board and the reserve banks and by urging stakeholders to engage in the comment process. The Board's solicitation of public comment, the official said, is intended to ensure any substantive changes are informed by public input prior to potential adoption.
