Federal Reserve Board releases hypothetical scenarios for its 2023 bank stress tests

The Board of Governors of the Federal Reserve System (FED) has published the stress test scenarios 2023 for FED supervised institutions; a corresponding list of affected banks is attached.
The stress tests this year include severely adverse scenarios to simulate a global economic recession and extremely negative financial market conditions. Specifically, they feature a severe global downturn (slowdown in economic activity and thus GDP) with „hightened stress in commercial real estate and corporate debt markets“ and a rising unemployment rate over two years of up to 10%. Other features include the simulation of severe declines in asset and house prices coupled with severe financial market volatility. For the first time, so the FED, will this year’s stress tests also include a „market shock to the trading books of the largest and most complex banks“.
In-scope institutions are required to apply these scenarios when conducting the required stress tests. The results of the stress tests provide the FED with capital adequacy information and information on the risk profiles of covered institutions. The results will also be used to define new, upcoming capital (buffer) requirements of participating institutions with the exemption of the results of the new market shock to the trading books mentioned above.
Details on the 2023 stress test scenarios may be found in enclosed PDF file (Link background) or if you follow above noted link.