Two of Canada's largest banks are set to go under the Federal Reserve's microscope as the central bank steps up stress testing of America's financial sector.

The Royal Bank of Canada and the Bank of Montreal are on a U.S. government list of institutions with more than $50 billion in assets to be given increased scrutiny for their ability to withstand further economic slowdowns, the Globe Mail reported Wednesday.

A total of 31 institutions will be subject to a round of tests by investigators with America's central bank. U.S.-based names include major lenders like Bank of America, Citigroup, Goldman Sachs and JP Morgan.

The tests are designed to gauge the banks' ability to withstand turmoil in Europe and abroad, and the Federal Reserve plans to make some of the results public, the newspaper said.

The new round comes on the heels of similar stress tests of U.S. lenders in early 2009. Under the Dodd-Frank legislation signed into law in July 2010, all U.S. lenders with total consolidated assets of more than $10 billion must undergo annual stress tests and give the results to the Federal Reserve.

Some 19 banks were tested in the first go-round, but no Canadian firms. The results largely showed that U.S. banks were sufficiently capitalized after the recession that devastated the U.S.

With more than 1,300 branches across the U.S., the Toronto-Dominion Bank has arguably the largest U.S. presence of any Canadian-domiciled bank. But the newspaper reported that TD will not be subject to the test because it is covered under different legislation and therefore exempt until 2015.