During the financial crisis of 2007–2008, several banks, including the UK's Northern Rock and the U.S. investment banks Bear Stearns and Lehman Brothers, suffered a liquidity crisis, due to their over-reliance on short-term wholesale funding from the interbank lending market.
On October 31, 2014, the Basel Committee on Banking Supervision issued its final Net Stable Funding Ratio (it was initially proposed in 2010 and re-proposed in January 2014).
[3] Various components of Basel III are being implemented in different jurisdictions and Basel committee reports progress on the state of implementation through its Regulatory Consistency Assessment Programme ("RCAP") which is published on a semi-annual basis.
[7] Over time NSFR calibration will be reviewed as proposals are developed and industry standards implemented.
This may help prevent the excessive use of the shadow banking system, including special purpose entity and structured investment vehicle, as these conduits often benefit from liquidity facilities (so-called back-stop facilities) granted by the bank which created them.