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While increasing its salvo to fight coronavirus (COVID-19), the US Federal Reserve announced new rules on Wednesday that create a “stress capital buffer” to determine how much banks must hold in reserve to guard against downturns, as per Reuters.

Key quotes

The final rule would integrate capital requirements stemming from the Fed’s annual bank stress tests with regular capital standards.

Fed staff estimated the final rule would actually lead to somewhat higher capital requirements for the nation’s largest banks, like JPMorgan Chase and Citigroup, and lower requirements for smaller institutions.

FX implications

Amid increasing efforts to tame the negative economic implications of the deadly virus, the news helps in the current risk reset. As a result, the USD/JPY manages to extend the recovery towards 107.55 after the US 10-year treasury yields and Wall Street benchmarks recovered losses before a few minutes.