Hello,
I thought I understood the concept of what an unencumbered asset is, but this section concernign the NSFR is throwing my ideas for a loop. Does this just mean that the loan, bond, etc is not pledged for collateral?
For instance, the RSF factor for an "unencumbered residential mortgage" is 65%. I am not sure why it matters is if this unencumbered or whether it was pledged as collateral. Seems like we would still need to fund it. Does this mean that if it IS used as collateral that we would have a different RSF? maybe 100%?
ALso, why are "short term" loans with a maturity of less than 1 year to retail customers included? I thought that only assets with a maturity of more than a year were considered in the denominator.
Thanks!
Shannon
I thought I understood the concept of what an unencumbered asset is, but this section concernign the NSFR is throwing my ideas for a loop. Does this just mean that the loan, bond, etc is not pledged for collateral?
For instance, the RSF factor for an "unencumbered residential mortgage" is 65%. I am not sure why it matters is if this unencumbered or whether it was pledged as collateral. Seems like we would still need to fund it. Does this mean that if it IS used as collateral that we would have a different RSF? maybe 100%?
ALso, why are "short term" loans with a maturity of less than 1 year to retail customers included? I thought that only assets with a maturity of more than a year were considered in the denominator.
Thanks!
Shannon
