All 32 of the nation’s biggest banks passed the Federal Reserve’s annual “stress test” of the financial system, the central bank said Wednesday, a sign that the banking system would remain healthy even if a major economic contraction occurred.

The annual stress test measures whether a bank’s capital, a financial cushion it uses to absorb losses, would remain at healthy levels even after hundreds of billions of dollars in projected losses. The tests are required under the Dodd-Frank Act, the law passed after the 2008 financial crisis that nearly brought down the global financial system.

The stress test applied only to the nation’s most systematically important banks, those whose failures would bring significant turmoil to the financial system.

A bank that performed poorly on the stress test could face higher capital requirements, which could limit its ability to pay dividends or buy back stock.