Macroscenarios for CECL

Macroeconomic forecasts are one of the key drivers of CECL estimation due to their non-linear effects on losses. There are different ways by which macroeconomic scenarios can be incorporated into the CECL framework for estimating reasonable and supportable forecasts for lifetime losses. The paper discusses how you can construct scenarios that are plausible and relevant to the geography and type of asset class of your bank. The choice of the scenario(s) can also affect procyclicality of your CECL allowances.