EBA: core funding ratio cannot replace NSFR when assessing funding risk

The European Banking Authority (EBA) published today a Report analysing the core funding ratio across the EU.

The Report is in response to a request from the European Commission to explore the possibilities of the core stable funding ratio (CFR) as a potential alternative metrics for the assessment of EU banks’ funding risk, taking into account proportionality.

The Report concludes that, overall, it would be misleading to rely only on the CFR to assess banks’ funding needs because, unlike the Net Stable Funding Ratio (NSFR), the CFR does not look at the whole balance sheet of a bank and, therefore, cannot fully assess a potential funding gap.

This Report is based on the same QIS data used for the NSFR Report published in December 2015. 

Source: ECB statement