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Question

BASEL III also introduced two liquidity ratios in the framework, what are the two ratios?

A Current Ratio and Leverage Ratio Correct Answer Incorrect Answer
B Liquidity Coverage Ratio and leverage ratio Correct Answer Incorrect Answer
C leverage ratio and Net stable Funding Ratio Correct Answer Incorrect Answer
D Liquidity Coverage Ratio and Net Stable Funding Ra Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

Basel III introduced two required liquidity ratios: Liquidity Coverage Ratio (LCR) ensures that sufficient levels of high-quality liquid assets are available for one-month survival in a severe stress scenario. Net Stable Funding Ratio (NSFR) promotes resilience over long-term time horizons by creating more incentives for financial institutions to fund their activities with more stable sources of funding on an ongoing structural basis.

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