ERM Glossary: Required Stable Funding
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The concept of required stable funding (RSF) is used in the
computation of the Net
Stable Funding Ratio being introduced by Basel III.
RSF is defined by Basel III as the amount of stable funding
required by supervisors based on the value of on-balance sheet assets held
multiplied by a RSF factor assigned to a particular asset type plus an
equivalent computation for on off-balance sheet activities (or potential
liquidity exposures). The RSF factors assigned to various types of assets are
intended to approximate to the amount of a particular asset that could not
be monetised through sale or use as collateral in a secured borrowing on an
extended basis during an adverse liquidity stress lasting one year. Details are
set out in paragraphs 129 to 136 of the Basel III liquidity proposals, i.e. BCBS (2010a).
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