The funds in these portfolios must either be invested in high quality liquid securities (reported as held for trading or available for sale) or placed as deposits in central the Basel III proposal regarding the Net Stable Funding Ratio (NSFR) requirement is implemented, the liquidity portfolio required will increase even further. If the assets held in banks’ liquidity portfolios and reported as held for trading or available for sale are included in the threshold calculations, this will give banks aiming at avoiding ring-fencing a strong incentive to place its funds as deposits at central.
