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Q » Explain liquidity coverage ratio (LCR).

Steven

06 Dec, 2025

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A » The Liquidity Coverage Ratio (LCR) is a regulatory standard designed to ensure that financial institutions maintain an adequate level of highly liquid assets to meet short-term obligations. Specifically, it mandates that banks hold sufficient high-quality liquid assets to cover net cash outflows over a 30-day stress period. This enhances the resilience of banks during financial crises, safeguarding against potential liquidity shortages and promoting overall stability in the financial system.

Michael

06 Dec, 2025

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A »The liquidity coverage ratio (LCR) is a financial metric that measures a bank's ability to meet short-term liquidity needs. It's calculated by dividing high-quality liquid assets by total net cash outflows over 30 days. A higher LCR indicates a bank's greater ability to withstand liquidity stress, with a minimum requirement typically set at 100%.

David

06 Dec, 2025

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