Implementing the Net Stable Funding Ratio – Regulation Impact Statement – Australian Prudential Regulation Authority
On 20 December 2016, the Australian Prudential Regulation Authority (APRA) released the final revised Prudential Standard APS 210 Liquidity (APS 210) and Prudential Practice Guide APG 210 Liquidity (APG 210) which incorporates, among other things, the Net Stable Funding Ratio (NSFR) requirements for some authorised deposit-taking institutions (ADIs).
The NSFR requires ADIs to fund their activities with more stable sources of funding on an ongoing basis, and thereby promotes greater balance sheet resilience. In particular, the NSFR should lead to reduced reliance on less-stable sources of funding, such as short-term wholesale funding, that proved problematic during the global financial crisis.
The final revised standard APS 210 will commence on 1 January 2018.
A Regulation Impact Statement (RIS) was prepared and certified by APRA, and was assessed as compliant by the Office of Best Practice Regulation (OBPR). The RIS was not assessed as consistent with best practice because it did not provide a level of analysis commensurate with the likely impacts on key stakeholders.
The preferred option is expected to impose one-off implementation costs of approximately $23.8 million on the 15 ADIs affected. However, these costs are not included in the Government’s estimates of regulatory burden because they relate to compliance with international obligations imposed as a prerequisite for participation in international markets.