ERM Glossary: Required Stable Funding (RSF)

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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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