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Net Stable Funding Ratio Proposal Under Fire

By Stephen Barlas
April 1, 2017
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The United States Capitol Building

In the deregulatory sights of Republicans is the proposed rule on a net stable funding ratio (NSFR) being proposed by federal banking agencies.

 

The proposal would require institutions subject to the rule to maintain sufficient levels of stable funding, thereby reducing liquidity risk in the banking system. The NSFR would become effective on January 1, 2018. “The Chamber believes that the Federal banking regulators’ proposed net stable funding ratio rule does not take into account its dramatic impacts on corporate end-users,” says Andres Gil, former director of the U.S. Chamber of Commerce Center for Capital Markets Competitiveness. “Specifically, the NSFR structurally discourages banks from investing in corporate debt and further restricts end-users’ ability to hedge by increasing the cost of risk management, thus impacting the short-term financing markets and sidelining productive uses of capital.”

 

Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.
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