The Net Stable Funding Ratio: Impact and Issues for Consideration

Jun 30, 2014 | J. Gobat, M. Yanase, J. Maloney | IMF
As part of Basel III reforms, the Net Stable Funding Ratio (NSFR) is a new prudential liquidity rule aimed at limiting excess maturity transformation risk in the banking sector and promoting funding stability. The revised package has been issued for public consultation with a plan of making the rule binding in 2018. This paper complements earlier quantitative impact studies by discussing the potential impact of introducing the NSFR based on empirical analysis of end-2012 financial data for over 2000 banks covering 128 countries. The calculations show that a sizeable percentage of the banks in most countries would meet the minimum NSFR prudential requirement at end-2012, and, further, that larger banks tend to be more vulnerable to the introduction of the NSFR.