The quantitative requirements come into force on 1 July 2015.

Banks that apply and are approved to be assessed under the Basel III requirements cannot elect to revert to the ELAR regulatory framework and once approved must comply with both the LCR and the NSFR when they become effective - i.e. on 1 January 2016 and 1 January 2018 respectively.

There are four ratios under quantitative requirements (see below), two of which are provided by the Basel Committee on Banking Supervision (BCBS) in what is commonly called the Basel III framework. The Liquidity Coverage Ratio (LCR) is fully described in their publication 'Basel III: The Liquidity Coverage ratio and liquidity risk monitoring tools' dated January 2013. The Net Stable Funding Ratio (NSFR) is fully described in their publication ‘Basle III: the net stable funding ratio’ dated October 2014

The ratios are as follows:

A – Eligible Liquid Assets Ratio (ELAR)

This is a measure to ensure banks hold minimum buffers of liquid assets.

The ratio requires the bank to hold an amount equivalent to 10% of its total balance sheet liabilities (excluding those included in regulatory capital) in high quality liquid assets, as described in detail later in this manual.

This ratio will be periodically reassessed and if necessary adjusted to reflect the appropriate Central Bank policy as well as any recalibration necessary to keep it aligned with the LCR.

B – Advances to Stable Resources Ratio (ASRR)

The ASRR is a measure that recognizes both the actual uses as well as the likely uses of funds in terms of the contractual maturity and behavioral profile of the sources of funds available to the bank, in order to ensure that there are limited maturity mismatches and cliff effects. Central Bank reporting for BRF 7 details the requirements of the ratio.

C – Liquidity Coverage Ratio (LCR)

This is a short term (30 days) stress test that covers bank specific and market wide stresses. It is determined by the Basel III standards and will be effective from 1 January 2016 at a compliance level of 70%. Subsequent years will see a flight path of an extra 10% per year until full (100%) compliance on 1 January 2019. Those banks that are permitted to use the Basel III ratios will comply at a 70% level as at 1 January 2016, 80% level at 1 January 2017, 90% at 1 January 2018 and 100% at 1 January 2019.

The relevant section in this manual will provide the definitions and assumptions used in the LCR calibration. Most of these assumptions are taken from the Basel Committee for Banking Supervision (BCBS) document titled “Basel III: The Liquidity Coverage Ratio and liquidity risk monitoring tools “issued January 2013. The section will also provide guidance over areas where national discretion has been utilized.

This section will be updated with any changes to the Basel III liquidity framework between the date of issuance of this manual and the effective date of the Basel III standards.

D – Net Stable Funding Ratio (NSFR)

This is a structural ratio that aims to ensure that the banks have sufficient long term funding beyond the LCR’s 30 day time horizon to meet both the funding of its long term assets and the funding of a portion of contingent liability drawdowns under a period of market wide stress.

Like the LCR, the relevant section of the manual will provide guidance in a local context but fundamentally the guidance is derived from the October 2014 paper from the BCBS. Any subsequent changes will be updated accordingly.

Banks approved by the Central Bank to move onto the LCR will also be required to comply with the NSFR. However, the date for compliance will be 1 January 2018 and until then banks must comply with the Advances to Stable Resources Ratio described in these guidelines.

From the date of these Regulations the ratios that all banks must comply with are the ELAR and the ASRR. Only those banks approved by the Central Bank to do so will be able to use the LCR and the NSFR for regulatory compliance.