Net Stable Funding Ratio (NSFR)

The Net Stable Funding Ratio (NSFR) is a financial measurement used by banks to ensure they maintain a stable funding structure over a one-year horizon. It compares a bank’s available stable funding (like customer deposits and long-term borrowings) to the required funding for its assets and activities. A higher NSFR indicates the bank has sufficient, reliable sources of funding to support its longer-term assets, reducing the risk of funding shortages during financial stress. Regulators often set minimum NSFR levels to promote banking stability and protect the financial system.