Under Article 510(6) of Regulation (EU) No 575/2013, the European Supervisory Authority (European Banking Authority) (EBA) established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council, was mandated to assess the appropriateness of the treatment of the stable funding required to cover the funding risk linked to securities financing transactions (SFTs) and to unsecured transactions with financial customers where those SFTs or unsecured transactions have a residual maturity of less than six months. In line with that mandate, EBA delivered a report on specific aspects of the NSFR framework on 16 January 2024. That report concluded that raising the required stable funding factors applying to the transactions referred to in Article 428r(1), point (g), Article 428s(1), point (b), and Article 428v, point (a), of Regulation (EU) No 575/2013 would have a negligible impact on the NSFR levels of credit institutions. However, that report did not assess the broader dimension or spillover effects regarding the liquidity of the sovereign debt markets and the effects on sovereign bond markets. Therefore, the considerations justifying the deferral of the raising of required stable funding factors, as provided for in Article 510(8) of Regulation (EU) No 575/2013, continue to prevail. In particular, as the bulk of SFTs are collateralised by sovereign debt instruments, a raise in the related required stable funding could reduce the liquidity in the markets concerned. That could, in turn, risk creating additional funding costs for Member States and altering monetary policy transmission mechanisms.
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