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      Question

      What does the Net Stable Funding Ratio (NSFR)

      require?​
      A 100% coverage of operational costs Correct Answer Incorrect Answer
      B Matching of liabilities with short-term assets Correct Answer Incorrect Answer
      C Minimum 3% leverage ratio Correct Answer Incorrect Answer
      D Stable funding > 100% of required funding over 1 year Correct Answer Incorrect Answer
      E Dividend payout equal to capital gains Correct Answer Incorrect Answer

      Solution

      The Net Stable Funding Ratio (NSFR) requires banks to maintain a minimum ratio of 100% on an ongoing basis, ensuring they fund long-term, illiquid assets (lasting over one year) with stable, long-term liabilities. It promotes resilience by forcing banks to reduce dependency on short-term wholesale funding and manage liquidity risks over a one-year horizon. 

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