NSFR could hit bank lending

Author: Edward Price | Published: 11 Jul 2016

Industry body The Clearing House has released research contending that the net stable funding ratio (NSFR) could prove an unnecessary and costly part of the post-crisis regulatory framework. The key finding is that if the US financial system normalises, the NSFR may hit bank lending.

Proposed in 2009, the Basel Committee on Banking Supervision finalised the NSFR as an international standard in 2014. Then in May this year, the Federal Reserve Board (FRB), Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) proposed the US NSFR. The three agencies, which collectively comprise the US federal banking regulators, assert the rule will strengthen the resilience of large banking organisations. In its mechanics, the NSFR is a requirement for banks to maintain a minimum level of stable funding relative to the liquidity of their assets, derivatives, and commitments over a one-year period.

Bill Nelson, The...