The Federal Reserve has finalized changes to its stress test rules, aiming to increase transparency and reduce capital requirement volatility by approximately 50%.

The Federal Reserve on Wednesday finalized changes to its stress test rules, aiming to enhance transparency and public accountability, and reduce the volatility of stress test-related capital requirements by approximately 50%. These adjustments primarily include two final rules, largely consistent with the 2025 proposal. One rule mandates annual public consultation on stress test scenarios and model changes, and updates the 2027 stress test models. The other rule requires averaging the results of the two most recent annual supervisory stress tests when calculating stress capital buffer requirements, starting in 2028. The Federal Reserve also sought comments on a proposal designed to better reflect differences in banks' fee-based revenue business models. Federal Reserve Vice Chair for Supervision Bowman stated that these changes will ensure bank risks are appropriately reflected in stress test losses and capital requirements. These adjustments are not expected to have a material impact on total capital requirements.