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Basel III introduced the use of two liquidity ratios, including the Liquidity Coverage Ratio and the Net Stable Funding Ratio. The Liquidity Coverage Ratio mandates
Basel III introduced the use of two liquidity ratios, including the Liquidity Coverage Ratio and the Net Stable Funding Ratio. The Liquidity Coverage Ratio mandates that banks hold sufficient highly liquid assets that can withstand a day stressed funding scenario, specified by the supervisors.
The mandate was introduced in at only of its stated requirements and is expected to increase by each year until when it takes full effect. The Net Stable Funding Ratio, also known as NSFR mandates that banks maintain stable funding above the required amount of stable funding for a period of one year of extended stress.
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