Federal Council adopts implementation of net stable funding ratio
Bern, 11.09.2020 - During its meeting on 11 September 2020, the Federal Council adopted an amendment to the Liquidity Ordinance (LiqO). The new provisions, which enter into force on 1 July 2021, introduce a net stable funding ratio (NSFR) aimed at ensuring the stability of banks' funding over the long term.
The Liquidity Ordinance transposes the requirements of the Basel Committee on Banking Supervision into Swiss law. The requirements concerning the liquidity coverage ratio (LCR) have already been implemented. The revised LiqO will now allow the Basel Committee's remaining requirements on banks' long-term funding to be implemented.
In line with the Basel Committee's requirements, implementation of the NSFR provisions had been due to take effect from 1 January 2018. Owing to delays in implementing the NSFR in the European Union and the United States, the Federal Council had hitherto postponed the ratio's implementation in Switzerland. The EU has now scheduled its implementation of the NSFR for June 2021, meaning that the NSFR will now apply in most states. The Federal Council has therefore decided that it too will put the corresponding ordinance amendments into force with effect from mid-2021.
The integration of the NSFR into the LiqO is the result of cooperation between the Administration and the relevant industry sectors. It was already put out for consultation in 2017, when its content was welcomed. Since then, no material changes have been made other than minor adjustments to reflect international developments.
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