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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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