but remains a flexible tool that can be used to understand the implications of a range of macroeconomic and financial conditions. that includes conditions that few could have imagined, such as those that descended last spring. the temporary shutdown of large segments of the economy caused an unprecedentedly large and swift drop in economic activity. equally unprecedented was the degree of uncertainty, both downside and upside, about how the economy would progress throughout the remainder of 2020. we responded to that abrupt change in environment by adapting stress testing to conduct a sensitivity analysis, an application of the stress testing models used to inform the board of governors about risks to bank solvency during those rapidly changing conditions. the sensitivity analysis we conducted was possible because we routinely collect standardized data from banks on their exposures and have developed our own loss and income models at the fed. thus, we were able to conduct this analysis purely internally, without putting additional burdens on banks during an already - difficult time. that analysis used the same models as the regular stress test, but we made several changes with the goal of gaining a real - time understanding of the implications for bank capital of quite plausible downside scenarios. the sensitivity analysis included three additional scenarios that reflected the potential economic implications of the covid event, as we understood them at the time. we also incorporated targeted adjustments to account for material changes to bank balance sheets resulting from the covid event, such as large drawdowns on corporate credit lines. at that time of great uncertainty, this sensitivity analysis helped sharpen our understanding of how banks might fare under the wide range of possible paths of the economy. we published that analysis to bolster public confidence in the financial system by providing a rigorous and timely assessment of the condition and prospects for the banking sector, based on data and wellestablished analytical methods. the additional analysis gave the public a view into the intellectual underpinnings of the policy actions the board took, which included special limitations on — but not a complete elimination of — capital distributions and a requirement for all firms to re - assess their capital needs and submit another capital plan in late 2020 in light of the economic uncertainty. the december round of stress tests that followed informed an adjustment to and extension of the distribution limitations into the first quarter of 2021, and we are continuing to use insights from the stress tests as we consider when to lift the limitations. throughout the covid event, the stress test has provided analysis necessary to tailor our actions to the risks we faced, and we have used the results from

time through our consistent and increasingly detailed public disclosures. for nearly a decade, we have published the scenarios and results, and a few years ago we greatly expanded our disclosure of the modeling methodology in an additional annual publication. looking ahead to the 2021 stress test continuing in that tradition, two weeks ago we initiated the 2021 stress test with the publication of this cycle ’ s stress scenarios. as we ’ ve said many times, the scenarios are not projections or predictions. they are designed according to a longstanding framework that we published after incorporating feedback from the public. this year, the macroeconomic scenario envisions a severe global recession accompanied by a period of heightened stress in u. s. commercial real estate and corporate debt markets. as discussed in recent financial stability reports, the current environment presents unique challenges for those asset classes, and our focus on them in the scenarios is consistent with the salient risks they pose to banks. the scenario layers additional significant stress on top of the stress already absorbed by banks over the past year, with the unemployment rate rising back to nearly 11 percent and stock prices falling more than 50 percent. in march, we will publish the details of the methodologies that underlie our models. this will mark the third year since we enhanced the disclosures to provide significantly more information about the stress testing models relative to earlier years. that information includes ranges of loss rates, estimated by using the models, for actual loans held by ccar firms ; portfolios of hypothetical loans with loss rates estimated by the models ; and more detailed descriptions of the models, 3 / 5 bis central bankers'speeches such as equations and key variables that influence the results of the models. these disclosures enhance the ability of the public to understand and interpret the supervisory stress test results. and as i ’ ve noted before, i believe these enhanced disclosures have been a step in the right direction toward striking the right balance between rigor and transparency. they do not reveal everything about our models — lest we find ourselves in a “ model monoculture ” where supervisors and banks converge on the same sets of risks, ignoring other potential problems. in june we ’ ll publish the firm - level results from the test. though 2021 is a year in which smaller firms are not subject to the supervisory stress test, the board recently made final a rule that will allow them to opt in. should they do so, their results will also be disclosed, and their stress capital buffers will be updated using the stress test results we publish in