The National Bank of Ukraine has canceled the short-term liquidity ratio (N6) for banks due to the end of a transition period for introducing the Net Stable Funding Ratio (NSFR).
The NSFR has been gradually introduced by banks since December 2019 in line with the established schedule.
The NSFR is based on the European laws and the Basel recommendations and determines the minimum required level of bank liquidity for a one-year horizon.
As the NSFR is a current liquidity indicator that is calculated based not only on statistical data but also the real volumes of the existing and required stable funding, the NBU does not consider it as reasonably practicable to further maintain the N6 ratio.
The NBU Board approved the respective decision by Resolution No. 59 On Amendments to Certain Regulations of the National Bank of Ukraine dated 23 March 2022, and is effective from 23 March 2022.
The NSFR encourages banks to rely on more stable and long-term funding sources and reduce their dependence on short-term financing. This helps balance out maturities of banks’ assets and liabilities and mitigate a systemic risk to financial stability that is posed by banks’ reliance on short-term funding.