The Net Stable Funding Ratio Requirement When Money is Endogenous
9 Pages Posted: 31 Jan 2015
Date Written: January 26, 2015
The NSFR regulation reduces banks’ liquidity risks by encouraging the use of deposit funding. Deposit money is created by lending, but the requirement restricts possibilities to grant loans. This contradiction may be destabilising if there is a substantial foreign debt.
Keywords: net stable funding ratio, endogenous money, liquidity regulation
JEL Classification: E51, G21, G28
Suggested Citation: Suggested Citation