Under Basel III large international financial institutions are required to meet a liquidity coverage ratio (LCR) requirement, which is the ratio of an institution's high quality liquid assets (HQLA) relative to its projected net cash outflows over a 30-day period, and a net stable funding ratio (NSFR) requirement, where the NSFR ratio is the amount of stable funding available divided by the required amount of stable funding required requirement for a specific institution based on the liquidity characteristics and residual maturities of various assets held by the institution as well as off-balance sheet exposures.

Question

Quizplus · Accepted Answer

This statement is true. Under Basel III, large international financial institutions are required to meet both liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) requirements. LCR is the ratio of an institution's high quality liquid assets (HQLA) to its projected net cash outflows over a 30-day period, while NSFR measures the amount of stable funding available in relation to the required amount of stable funding based on the liquidity characteristics and residual maturities of the institution's assets and off-balance sheet exposures.

Under Basel III Large International Financial Institutions Are Required to Meet