The Liquidity Coverage Ratio compares a bank's stock of high quality liquid assets to its total net cash outflows over a thirty day stress period. The ratio must be at least one hundred percent, so the bank could meet a full month of stressed outflows using assets it can sell or pledge quickly.
It is one of the two headline liquidity standards introduced after the 2008 crisis. Treasury teams manage it daily by shaping the deposit base, the maturity of funding and the size of the liquid asset buffer.
