Liquidity Coverage Ratio

From Open Risk Manual


Liquidity Coverage Ratio. (LCR) It is the ratio of current assets to current liabilities. It is an essential component of Basel III regulation.

LCR shows if a financial institution has an adequate stock of unencumbered high-quality liquid assets (HQLA) that can be converted into cash easily and immediately in private markets to meet its liquidity needs for a30-calendar-day liquidity stress scenario.