Editor's Note: Barnabas Reynolds is head of the global Financial Institutions Advisory & Financial Regulatory Group at Shearman & Sterling LLP. This post is based on a Shearman & Sterling client publication. The complete publication, including annex, is available here.
A key new element of the Basel III framework for regulatory capital aims to improve banks’ management of their funding and liquidity profiles. Two new measures are proposed: a “net stable funding ratio”, and a “liquidity coverage ratio”. The net stable funding ratio has received relatively little attention due to its seemingly distant implementation date of 1 January 2018. However, its impact will be immediate and significant for many banking institutions.
