LCR
BankingDefinition
Liquidity Coverage Ratio. Bank's high-quality liquid assets (Treasuries + cash) divided by 30-day projected stressed cash outflows. Minimum 100%.
Requires banks to hold enough liquid assets to survive a 30-day stress scenario. Reformed post-2008 to prevent another bank-run-style collapse. The 2023 SVB failure exposed weaknesses in how unrealized losses on HTM securities flow into LCR.
Requires banks to hold enough liquid assets to survive a 30-day stress scenario. Reformed post-2008 to prevent another bank-run-style collapse. The 2023 SVB failure exposed weaknesses in how unrealized losses on HTM securities flow into LCR.