The US central bank will now publish its secret bank stress test models

The US central bank wants to make its bank stress test models and scenarios public. This means banks and the public will see how the central bank decides if banks can survive a financial crisis.

The US central bank's stress tests determine how much cash large banks must keep in reserve. These tests have been largely opaque, with banks only seeing the results, not the underlying calculations. This change means the central bank will publish detailed documentation of its models and scenarios, and invite public comment. Banks can now scrutinize the models, potentially challenging assumptions or methodologies, and the public can better understand these critical financial stability decisions.