Bank Al-Maghrib formally adopted regulatory texts covering the Net Stable Funding Ratio and the Internal Liquidity Adequacy Assessment Process in December 2024, completing a significant phase of Morocco's alignment with the Basel III international banking standards. The measures require Moroccan banks to maintain adequate high-quality liquidity buffers over both short- and medium-term horizons, strengthening the resilience of the domestic banking system against funding stress.
The NSFR sets out requirements for banks to hold sufficient stable funding relative to the profile of their assets and off-balance-sheet exposures over a one-year horizon, while the ILAAP framework establishes expectations for how institutions should internally assess and manage their liquidity needs. Together, the two instruments form the core of the Basel III liquidity architecture that the Basel Committee on Banking Supervision developed in the wake of the global financial crisis, and their adoption places Morocco firmly within the international regulatory mainstream.
IMF SUPPORT UNDERPINS SUPERVISORY UPGRADE
The finalisation of the ILAAP framework was supported by an IMF technical assistance mission, which assisted BAM in completing a review guide for ILAAP reports and in providing training for supervisory staff. The involvement of the IMF reflects Morocco's broader strategy of engaging international institutions to build the technical and human-resource capacity needed to implement and enforce more sophisticated prudential standards effectively across the banking sector.
Technical assistance from the IMF in the area of banking supervision typically covers methodologies for reviewing banks' own liquidity assessments, stress-testing approaches, and the benchmarks supervisors use to challenge institutions' internal models. For BAM, the successful completion of this support phase means its supervisory teams are better equipped to scrutinise the ILAAP submissions that banks will now be required to prepare on a regular basis as part of their supervisory obligations.
The adoption of the NSFR and ILAAP texts also coincided with BAM completing the first full exercise of its Supervisory Review and Evaluation Process in 2024. The SREP is a comprehensive annual assessment through which supervisors evaluate each bank's business model, governance, capital adequacy, and liquidity position, and it underpins the supervisor's ability to set institution-specific requirements above the regulatory minima when warranted by an institution's risk profile.
COMPLETING THE LIQUIDITY FRAMEWORK ARCHITECTURE
Morocco had already implemented the Liquidity Coverage Ratio, which governs short-term liquidity resilience, and the NSFR adoption fills the remaining gap in the structural liquidity dimension of Basel III. Having both ratios in place means Moroccan banks will face binding requirements that address liquidity stress over different time horizons, aligning the country's regulatory perimeter more closely with practice in advanced economies and major emerging markets. The two ratios are complementary, with the LCR addressing a 30-day stress window and the NSFR a one-year structural funding requirement.
The completion of the Basel III liquidity framework is relevant for the Moroccan banking sector's international standing, given that several of the country's larger banks operate across sub-Saharan Africa and interact with international counterparties and capital markets. A fully implemented liquidity framework can support confidence among foreign investors and correspondents that Moroccan institutions are supervised to standards broadly comparable with international benchmarks, which can facilitate cross-border banking relationships and correspondent banking access.
BAM's regulatory programme reflects a deliberate sequencing strategy: having implemented capital requirements and the LCR in earlier years, the regulator turned its attention to the structural funding and internal assessment pillars. The completion of this phase positions Morocco to engage with any future revisions to the Basel standards from a more solid compliance baseline, and provides the banking sector with a clearer supervisory framework against which to manage their liquidity positions going forward.