Megabanks can now smooth out their stress test results

The US central bank wants to change how it calculates how much cash large banks must keep in reserve. Instead of using only the most recent stress test, it would use an average of the last two years. This would make the cash requirements less volatile for banks.

Banks have complained that the current system makes their capital requirements jump around too much, making long-term planning difficult. This change means banks can predict their cash needs more reliably. It also gives them an extra three months to meet the new requirements each year.