What is the Liquidity Coverage Ratio (LCR)? | Finance Strategists | Your Online Finance Dictionary

Liquidity coverage ratio or LCR refers to the percentage amount of cash, cash equivalents, or short-term securities that large banks are required to hold as reserves to meet their short-term financial obligations during a crisis event. The LCR is calculated by dividing a bank's most liquid assets by its cash outflows over a 30-day period.
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0:00 Liquidity Coverage Ratio (LCR) Definition
0:23 LCR Calculation
0:55 Liquidity Coverage Ratio Requirements
1:25 LCR Formula
2:19 LCR Question & Application
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[@agustinmeza4915]

Hi! Great video. Could you upload a similar one but explaining the NSFR please?

[@jeromeroyston]

Regulators cannot constantly get in touch with the bank with the type of strategy they employ to increase their lending and expanding their business but they can mandate the minimum requirement of liquidity to cover for their mishaps in the lending business.

[@mahammadshikhiyev4219]

Hey, Id love to know the answer to the question mentioned in the end of video. In my opinion, setting the minimum of LCR standard is pretty enough, but not really sure about it. Im not pro in Risk Analytics. Thanks in advance for ur response.

[@hadeel8035]

What is the answer for the last Q ?

[@mixyt4043]

What is the difference between the LCR and reserve requirements set by the central bank?

[@mjsmcd]

Does this limit the amount of loans a bank can make?

[@millyhome7507]

What happens if the LCR ratio is not met?

[@ExcelTutorials1]

Thanks for the helpful explimation!

[@financestrategists4468]

Thanks Brandon!

[@ExcelTutorials1]

@@financestrategists4468 You're welcome!

[@eamabeangke7667]

Prevention is better than cure. It is better to prevent a liquidity crisis from happening by giving making sure that banks are properly assessing loans rather than putting regulation to ensure that banks are able to meet a liquidity crisis with enough cash.