Basel Committee amends NSFR standard for 6mo+ central bank claims

The Basel Committee on Banking Supervision has approved a technical amendment related to the treatment of extraordinary monetary policy operations in the Net Stable Funding Ratio (NFSR). Effective immediately, this amendment to the NSFR standard allows reduced required stable funding factors for central bank claims with a maturity of more than six months, subject to a floor of 5%. This amendment aims to provide greater flexibility in the treatment of extraordinary central bank liquidity-absorbing monetary policy operations.

The following text will be added and applies to extraordinary liquidity-absorbing monetary policy operations: “In the case of exceptional central bank liquidity absorbing operations, claims on central banks may receive a reduced RSF factor. For those operations with a residual maturity equal to or greater than six months, the RSF (required stable funding) factor must not be lower than 5%. When applying a reduced RSF factor, supervisors need to closely monitor the ongoing impact on banks’ stable funding positions arising from the reduced requirement and take appropriate measures as needed. Also, as further specified in paragraph 31 ( of the NSFR standard), assets that are provided as collateral for exceptional central bank liquidity providing operations may receive a reduced RSF factor which must not be lower than the RSF factor applied to the equivalent asset that is unencumbered. In both cases, supervisors should discuss and agree on the appropriate RSF factor with the relevant central bank.”

Read the full technical amendment

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