Liquidity Coverage Ratio: Difference between revisions
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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. | 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 | This requirement has been implemented in a staged approach commencing in January 2015 to reach the 100% requirement by January 2019. It will reduce 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 revenue 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. | 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. | ||
Revision as of 12:00, 11 August 2015
Bank regulation.
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 a staged approach commencing in January 2015 to reach the 100% requirement by January 2019. It will reduce 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 revenue 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.
