The net stable funding ratio (NSFR) requires financial institutions to:

The net stable funding ratio (NSFR) is a regulatory requirement that aims to ensure financial institutions maintain a stable funding structure that is appropriate relative to the liquidity profile of their assets. By requiring banks to have a stable funding source over a one-year horizon, the NSFR promotes resilience by ensuring that financial institutions are less reliant on volatile short-term funding, which can stress liquidity during periods of market instability.

Maintaining stable funding means that the institution should have sufficient long-term funding for its illiquid assets, which directly supports the ratio's aim to reflect the liquidity risk profile of an institution's activities. This focus on the stability of funding sources reinforces the importance of adequately matching the liquidity needs of assets with appropriate funding, thus fostering a more robust financial environment.

The other options do not align with the core requirement of the NSFR. For instance, expanding the asset portfolio or increasing short-term liabilities could create a mismatch in funding and liquidity. Similarly, maximizing cash outflows would undermine the purpose of ensuring stable funding, as it would indicate a decrease in liquidity.