ESRB has published its response to the EBA consultation on the net stable funding ratio (NSFR). ESRB puts forward the following considerations:
- a flexible use of the NSFR should not be pre-empted as there is only limited experience with the macroprudential use of the ratio;
- the microprudential NSFR standard should be finalised first, then its net effects both on bank-specific and systemic liquidity risks assessed before drawing conclusions for the macroprudential use; and
- departing from a globally-agreed methodology could have undesired and unknown effects for the EU banking system, in terms of level playing field, incentives and systemic liquidity risk.
In relation to specific areas in Article 510 CRR, ESRB proposes:
- to rely, in general, on the same required stable funding and available stable funding weights as agreed by the Basel Committee;
- to explicitly mention the NSFR as a potential macroprudential tool in the CRR;
- not to introduce preferential treatment for specific business models unless it is proven that there is no risk stemming from maturity mismatch;
- to maintain the reporting of the NSFR by significant currency;
- to apply the NSFR on a consolidated and individual basis, subject to appropriate waivers or exemptions; and
- to introduce an NSFR requirement by significant currency.
(Source: ESRB Responds to NSFR Consultation)