Bank Liquidity Is Essential for Financial Stability

Bloomberg Brief
May 6, 2016

U.S. federal bank regulators recently released a notice for proposed rulemaking for the net stability funding ratio (NSFR), a bank regulation that will fundamentally change the nature of how large banks fund themselves. Systemically important banks in the U.S. that are over $250 billion or more than $10 billion in foreign exposures will have to prove to bank regulators that they are liquid for a 12-month period. The U.S.’s proposal is largely in line with the guidance that the Basel Committee on Banking Supervision finalized in 2014. The NSFR, together with the liquidity coverage ratio, form the liquidity standard, which is a new and very important element in Basel III…Read More

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