The Office of Financial Research ("OFR") examined how the implementation of new Basel III capital buffer requirements by the Board of Governors of the Federal Reserve System could affect Comprehensive Capital Analysis and Review stress test results.
The OFR brief examined various reasons to include the buffers, and OFR recommended that the capital conservation buffer (which applies to all U.S. banks) and the "G-SIB" buffer (which applies to eight U.S. global systematically important banks) be implemented into the stress test scenarios. The OFR cautioned that the Federal Reserve proposal to permit static balance sheets (under which banks do not need to assume lending growth) in the stress test scenarios could impede the accuracy of the test results.
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