A more detailed description of the NSFR is contained in the BCBS document “Basel III: the net stable funding ratio” dated October 2014. If there is any ambiguity between this guidance manual and this document the BCBS document takes precedent. Banks are expected to meet the NSFR on an ongoing basis.

1. 144) The NSFR standard is derived from the BCBS document ‘Basel III: the net stable funding ratio’ and will come into effect on 1 January 2018. There will no requirement to comply with the standard until that date although reporting will start beforehand and only for those banks who qualify for the LCR as their liquidity ratio will be affected. It is meant to compliment the LCR by limiting the cliff effects associated with a stacking up of liability maturities within a short period of time. It is designed to ensure that banks fund their activities with sufficiently stable sources of funding to mitigate the risk of future funding stress.
2. 145) The NSFR is defined as the amount of available stable funding relative to the amount of required stable funding. This ratio should be equal to at least 100% on an ongoing basis.
3. 146) Available stable funding’ is defined as the portion of capital and liabilities expected to be reliable over a 1 year time horizon. The amount of stable funding required is a function of the liquidity characteristics and residual maturities of the various assets held by an institution including off-balance sheet exposure
4. 147) To simplify the NSFR is: