The European Council adopted amendments to the EU’s bank liquidity framework under the Capital Requirements Regulation to permanently maintain the current transitional ratio levels used in the net stable funding ratio (NSFR) calculation for certain short-term securities financing transactions (SFTs). The change is intended to support market liquidity while avoiding a competitive disadvantage for EU banks versus international peers. Under the previous timeline, the relevant SFT factors in the NSFR would have increased on 28 June 2025. Keeping the lower factors, which are below those in the Basel standards, is intended to encourage liquidity provision by EU banks without affecting their stability, and aligns the EU approach with major non-EU jurisdictions that have already set lower permanent SFT factors for NSFR purposes. The transitional treatment was originally introduced to prevent disruptions in market liquidity, particularly in sovereign bond and repo markets, where short-term SFTs are an important source of secured funding. The amendments will be published in the EU’s Official Journal and will apply from 29 June 2025. The European Banking Authority will monitor and report on the impact of the changes every five years.
European Council 2025-06-12
European Council makes transitional NSFR treatment for certain short-term securities financing transactions permanent from 29 June 2025
The European Council amended the EU's Capital Requirements Regulation to permanently maintain current transitional ratio levels in the net stable funding ratio (NSFR) for certain short-term securities financing transactions (SFTs). This supports market liquidity and prevents competitive disadvantages for EU banks compared to international peers. The amendments take effect on 29 June 2025, with the European Banking Authority monitoring the impact every five years.