Definition

Liquidity Coverage Ratio (LCR)

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The liquidity coverage ratio or LCR describes the ratio of highly liquid assets secured by financial institutes, to ensure their ongoing capability to complete short-term commitments.

LCR is a generic stress analysis that intends to predict market-wide shocks and ensure that financial institutions retain appropriate capital preservation, to withstand any short-term disruptions in liquidity, that may afflict the market.

 

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