Reserve pressure test assumes unemployment rate

Reserve pressure test assumes unemployment rate

The global economic outlook is shrouded by uncertainties. The Federal Reserve announced on Tuesday that it will conduct detailed capital analysis and review (CCAR) and Dodd-Frank Act stress tests on large banks, such as the US economy. The unemployment rate soared to 10% in the face of serious adversity, how large banks maintain sufficient capital and meet regulatory requirements.

Tested in a global recession

The Fed conducts annual pressure tests on large banks, which are roughly divided into three scenarios: basic conditions, economic adversity and economic downturn, and 28 economic variables. This year, the Reserve Bureau has set the economy into a serious adverse situation as a global economic recession, including the US unemployment rate will jump from the current level of about 4%, a significant jump of 6 percentage points to 10%, 10-year US bond yields with commercial real estate and residential prices Falling.

Quars, a member of the Federal Reserve Board and vice chairman of the regulatory department, said that it is believed that this year’s bank pressure measurement scenarios will effectively test the capital performance of large banks. According to the new regulations, the storage pressure targets are large banks with assets ranging from $100 billion to $250 billion. Banks undergoing pressure testing must submit capital plans and internal pressure test results to the Reserve Bureau by April 5.