NSFR to be implemented next year
A PROPOSED metric under the Basel 3 framework aimed at mandating local banks to have ample liquidity to counter global market volatilities will face some delay in implementation, according to a top central bank official.
“I don’t think it will be released by this year,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor A. Espenilla, Jr. said when asked for an update on the central bank’s implementation of the net stable funding ratio (NSFR).
“So maybe early next year because we still have to take in all of the comments and refine it and then submit it to the Monetary Board so realistically it might not be completed in time for 2016,” he told reporters on Monday on the sidelines of the Chamber of Thrift Banks’ General Membership Meeting.
The NSFR, earlier eyed for rollout before yearend by the BSP, is similar to the liquidity coverage ratio ( LCR) metric under Basel reforms, which mandates universal and commercial banks to have easily convertible and high-quality assets to cover their net cash outflows over a 30-day financial stress period. Lenders should comply with the LCR by Jan. 1, 2019.
Under the NSFR, big banks will be required to have enough liquidity or “reliable” sources of funding for a longer period of one year so that won’t rely too much on shorter- term funding and promote better assessment of risk across all on- and off-balance sheet items.
Mr. Espenilla also said on Monday that the BSP has lined up 82 regulations eyed to enhance risk management and liquidity rules in the country’s financial sector.
The country’s financial system continued to expand in the third quarter, driven by growth among big banks. Total resources reached P16.197 trillion, up 9.6% from P14.669 trillion in the same period in 2015. •