net stable funding ratio

BCBS Publishes Progress Report on Implementation of Basel Regulatory Framework

 

On May 7, the Basel Committee on Banking Supervision (BCBS) published its sixteenth progress report on BCBS members’ implementation of Basel III. The report can be found here.

The report, which looks at implementation as of the end of March 2019, focuses on the status of adoption of the Basel III standards to ensure they are transformed into national law or regulation in accordance with agreed timeframes. The Basel III standards reviewed include: risk-based capital standards, the leverage ratio, the standards for global and domestic systemically important banks and interest rate risk in the banking book, the net stable funding ratio (NSFR), the large exposures framework and the disclosure requirements.

The report states that since BCBS’s previous report, published in October 2018, member jurisdictions have made progress in implementing standards for which deadlines have already passed, including those relating to the revised securitization framework. However, progress has been limited in the implementation of other standards which have yet to be finalized and put into effect in a number of jurisdictions, including the NSFR, which took effect on January 1, 2018, but only 11 jurisdictions have final rules in place.

Agencies Propose Net Stable Funding Ratio Rule

On May 3, 2016, the Federal Deposit Insurance Corporation, the Federal Reserve and the Office of the Comptroller of the Currency proposed a rule, the net stable funding ratio (the “NSFR”), to strengthen banks by requiring them to maintain a minimum level of stable funding relative to the liquidity of their assets, derivatives and commitments over a one-year period.  The most stringent of the NSFR’s requirements would apply to, among others, banking organizations with $250 billion or more in total consolidated assets.  The NSFR would become effective January 1, 2018.  ReleaseProposed Rule.