Answer: Net stable funding ratio.

## Explanation The correct answer is **B. Net stable funding ratio (NSFR)**. ### Key Differences: - **Liquidity Coverage Ratio (LCR)**: A short-term liquidity requirement designed to ensure banks have sufficient high-quality liquid assets to survive a 30-day stress scenario. - **Net Stable Funding Ratio (NSFR)**: A longer-term structural liquidity requirement that requires banks to maintain a stable funding profile relative to their asset composition and off-balance sheet activities over a one-year horizon. ### NSFR Details: - **Time horizon**: 1 year - **Purpose**: To promote resilience over a longer time horizon by requiring more stable funding sources - **Calculation**: Available stable funding (ASF) / Required stable funding (RSF) ≥ 100% - **Basel III requirement**: Part of the Basel III liquidity framework alongside LCR The NSFR specifically addresses the risk that a bank's longer-term assets are funded with short-term liabilities, which could create liquidity problems during stress periods lasting more than 30 days.

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