A type of maturity mismatch that arises between a bank’s long-term liabilities (whether contractual or behavioral) and long-term assets. All banks experience a structural maturity mismatch to a certain extent. According to empirical evidence, banks with a large structural maturity mismatch pose a threat to financial stability across the banking system, as this mismatch can potentially impact these banks eventually.

This mismatch can create negative consequences for bank’s clients, particularly savers, including a likely knock-on effect for other entities operating in the sector, and possible deterioration in clients’ confidence in the financial system as a whole.

On banks’ focus on their structural maturity mismatches must ensure less dependence upon short-term wholesale funding to finance their core (illiquid) assets. The liquidity mismatch is measured in such a case using a measure known as the net stable funding ratio (NSFR). The NSFR is calculated both by identifying the amount of assets that a bank probably needs to finance beyond the short term (e.g., after a 12-month period), i.e., the bank’s required stable funding, and by establishing the liabilities that are likely to remain on the bank’s balance sheet over the same period, i.e., the bank’s available stable funding. Assets and liabilities that have maturities less than a 12-month period are assumed to roll over if these are involved in a bank’s core business activities (in the case of assets) and dependable, relationship-driven deposits or debt (in the case of liabilities). The ratio (NSFR) relates the available stable funding to the required stable funding. An NSFR ratio exceeding 100% is a normal yardstick.