The Bangko Sentral ng Pilipinas said its monetary board approved the implementation of the net stable funding ratio for universal and commercial banks to help them strengthen their ability to withstand liquidity stress, the central bank said June 4.
The NSFR is a measure of a bank's ability to fund its liquidity needs over one year. It complements the liquidity coverage ratio, which refers to highly liquid assets held by financial institutions to meet short-term obligations.
Beginning Jan. 1, 2019, the covered institutions will be required to maintain an NSFR of 100% on both solo and consolidated bases.
To ensure a smooth transition, the central bank said it is adopting a six-month observation period, starting July 1. During the observation period, covered institutions failing to meet the minimum ratio will be required to submit a funding plan or actions that will be taken to improve their funding profile and comply with the requirement.
