Liquidity Coverage Ratio (LCR)

Liquidity Coverage Ratio (LCR),

What is The Definition of Liquidity Coverage Ratio (LCR)?

  1. 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)

Liquidity:

Meanings of Liquidity:
  1. Availability of cash for market or business.

Sentences of Liquidity
  1. Bank closures lead to serious liquidity problems in small businesses

Coverage:

Meanings of Coverage:
  1. The degree to which something is related or applies to something else.

Sentences of Coverage
  1. Grammar does not provide complete language coverage.

Ratio:

Meanings of Ratio:
  1. A quantitative relationship between two quantities that indicates how many times one value is included or the other quantity is included.

Sentences of Ratio
  1. The male to female employment ratio is 8 to 1

Synonyms of Ratio

relationship, correspondence, proportion, comparative extent, correlation, balance, comparative number, quantitative relation