Liquidity Coverage Ratio (LCR),
What is The Definition of Liquidity Coverage Ratio (LCR)?
The Short Term Liquidity Ratio (LCR) defines the ratio of highly liquid assets held by a financial institution to ensure its ability to meet short-term obligations. This ratio is primarily a general stress test aimed at anticipating market shocks and ensuring that financial institutions have adequate capital protection to deal with liquidity constraints in the short term.
- LCR requires a Basel III in which banks are required to have sufficiently high quality liquid assets to fund expenses for up to 30 days.
- LCR is a stress test aimed at anticipating market shocks and ensuring that financial institutions have sufficient capital reserves to meet short-term liquidity constraints.
- Of course, only in the next financial crisis will we know whether LCR is a sufficient financial cushion for banks.
Literal Meanings of Liquidity Coverage Ratio (LCR)
Meanings of Liquidity:
Availability of cash for market or business.
Sentences of Liquidity
Bank closures lead to serious liquidity problems in small businesses
Meanings of Coverage:
The degree to which something is related or applies to something else.
Sentences of Coverage
Grammar does not provide complete language coverage.
Meanings of Ratio:
A quantitative relationship between two quantities that indicates how many times one value is included or the other quantity is included.
Sentences of Ratio
The male to female employment ratio is 8 to 1
Synonyms of Ratio
relationship, correspondence, proportion, comparative extent, correlation, balance, comparative number, quantitative relation