LCR
Liquidity Coverage Ratio
Definition
A Basel III liquidity standard requiring banks to hold sufficient high-quality liquid assets (HQLA) to cover their total net cash outflows over a 30-day stress scenario. The minimum LCR requirement is 100%, ensuring banks can withstand short-term liquidity disruptions.
Regulatory Context
The LCR was introduced as a direct response to the liquidity crises during 2008. It is implemented in the EU through the CRR and LCR Delegated Regulation, which defines the classification of HQLA (Level 1, 2A, 2B assets) and the calculation of net cash outflows.