Last week, the Federal Reserve issued its inaugural report on financial stability.  The report provides a clear assessment that the nation’s banking system is strong, resilient, and positioned to support the economy, even in the event of an economic downturn.  In addition, the report highlights the tremendous progress that has been made by institutions, policymakers, and regulators during the past decade to promote financial stability.

Reforms undertaken since the financial crisis have made the U.S. financial system far more resilient than it was before the crisis,” the report said. “Banking institutions have built stronger capital and liquidity buffers that, together with reforms to the rules governing money market funds, strengthen the ability of institutions to withstand adverse shocks and reduce their susceptibility to destabilizing runs.” 

—Federal Reserve’s Financial Stability Report

Here are three key takeaways related to the resiliency of large financial institutions from the Financial Stability Report from the Federal Reserve (Fed) that are worth a more thorough review:

1. Strong Capital Means Banks Can Continue to Lend, Even in a Severe Downturn
2. Liquidity is Also High
3. Banks Have Stable Funding Sources, Reducing Risks of Runs