Limited Price Indexation and Liquidity Coverage Ratio: Difference between pages

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(LPI).
''Bank regulation''


(LCR).


''Pensions''.  
The LCR is a requirement under Basel III for a bank to hold high-quality liquid assets (HQLAs) sufficient to cover 100% of its stressed net cash requirements over 30 days.  


The minimum annual rate of indexation which must be applied in the UK to employee pensions in payment or deferred pensions, where they relate to employment after 5 April 1997.


LPI is the lesser of the actual rate of inflation and either 5% or 2.5% depending on (1) the date when the pension entitlement was accrued and (2) whether the pension is in payment or deferred.
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.


However, UK pension schemes can make increases in pension payments over and above LPI if they wish and if their scheme rules allow it.
The LCR applies throughout the European Union.
 
The LCR has been implemented in stages from 2015, to reach the 100% requirement by January 2019.
 
 
It reduces the value to a bank of cash deposits 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.  




== See also ==
== See also ==
* [[Price indexation]]
* [[Basel III]]
* [[Retail Prices Index]]
* [[European Union]]
* [[Consumer Prices Index]]
* [[Net Stable Funding Ratio]]
* [[Cash investing in a new world]]
* [[HQLA]]
* [[Level 1 liquid assets]]
* [[Level 2 liquid assets]]
* [[Leverage Ratio]]
* [[Liquidity buffer]]
* [[Liquidity risk]]
* [[LR]]
* [[OLAR]]
* [[Pillar 1]]
* [[Required Stable Funding]]
* [[Survival period]]


[[Category:Manage_risks]]
[[Category:Compliance_and_audit]]
[[Category:Liquidity_management]]

Revision as of 12:25, 17 November 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 stressed net cash requirements over 30 days.


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 LCR applies throughout the European Union.

The LCR has been implemented in stages from 2015, to reach the 100% requirement by January 2019.


It reduces the value to a bank of cash deposits 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.


See also

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