Fed announces new banking stress tests

23 November 2011

Major banks in the US are to undergo a new round of stress tests to determine their financial positions as the country continues to struggle with its debt crisis.

The Federal Reserve has announced this move as it seeks to increase confidence in the nation's banking system amid fears it could be suffering a severe knock-on effect from the ongoing issues in the eurozone.

First implemented last year, these examinations are designed to make the practices of lenders more transparent by showing if they are in strong enough shape to handle any further shocks to the market.

According to the Fed - which is chaired by Ben Bernanke - the results of the tests are not related to its general outlook for the wider economy.

Daniel Tarullo, governor in charge of financial regulation at the body, was quoted by the Financial Times as saying: "My baseline for all this is towards more disclosure and standardised and regularised disclosure."

By Gary Cooper

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