Fiscal risk and Liquidity Coverage Ratio: Difference between pages
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The | ''Bank regulation''. | ||
(LCR). | |||
The LCR is a requirement under Basel III for a bank to hold high-quality liquid assets (HQLAs) sufficient to cover 100% of its net cash requirements over 30 days. | |||
This requirement has been implemented in stages from January 2015, to reach the 100% requirement by January 2019. | |||
It reduces the value to a bank of cash deposit of less than 30 days tenor because they are only worth the income on the HQLAs if a bank forecasts no short term cash receipts to cover repayment. | |||
The purpose of this requirement is to ensure that banks can manage stressed market conditions, under which the bank is assumed to suffer substantial outflows of the cash previously deposited with it. | |||
== See also == | == See also == | ||
* [[ | * [[Basel III]] | ||
* [[ | * [[Net stable funding ratio]] | ||
* [[ | * [[Cash investing in a new world]] | ||
* [[HQLA]] | |||
* [[Leverage ratio]] | |||
* [[Liquidity buffer]] | |||
* [[Liquidity risk]] | |||
* [[LR]] | |||
* [[OLAR]] | |||
* [[Survival period]] | |||
[[Category:Compliance_and_audit]] | |||
[[Category:Liquidity_management]] | |||
Revision as of 16:42, 13 August 2016
Bank regulation.
(LCR).
The LCR is a requirement under Basel III for a bank to hold high-quality liquid assets (HQLAs) sufficient to cover 100% of its net cash requirements over 30 days.
This requirement has been implemented in stages from January 2015, to reach the 100% requirement by January 2019.
It reduces the value to a bank of cash deposit of less than 30 days tenor because they are only worth the income on the HQLAs if a bank forecasts no short term cash receipts to cover repayment.
The purpose of this requirement is to ensure that banks can manage stressed market conditions, under which the bank is assumed to suffer substantial outflows of the cash previously deposited with it.
