Liquidity Day 5 💧 LCR made simple. Can banks survive 30 days? #Banking #liquidity
21 April 2026·1 min
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Welcome to Day 5 of the Industry Portal liquidity management course, where we break down the Liquidity Coverage Ratio (LCR) — one of the most important metrics in modern banking.
In this session, you will learn how the LCR works, why it was introduced after the Global Financial Crisis, and how it ensures banks can survive a severe 30 day stress scenario.
We explain the structure of the LCR in a clear, step by step way, covering high quality liquid assets and net cash outflows. You will understand how liquidity buffers are built, what qualifies as eligible assets, and how regulators apply haircuts and limits.
On the cash flow side, we break down how banks model outflows from deposits, wholesale funding, and derivatives, alongside inflows and regulatory caps. The focus is on why these assumptions are conservative and how they reflect real world stress behaviour.
The session also explores how banks manage the LCR day to day, including monitoring, internal buffer targets, and how Treasury and Risk teams respond to volatility in the ratio.
From a regulatory perspective, we explain how supervisors such as the Prudential Regulation Authority and the European Central Bank oversee LCR compliance and how it feeds into frameworks like ILAAP and SREP.
By the end of this session, you will understand why the LCR is a critical defence against liquidity crises and how it shapes funding, buffer management, and decision making across banks.
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Subscribe for the full liquidity management course.
#LCR #LiquidityManagement #Banking #Finance #Treasury #RiskManagement #BaselIII #LiquidityRisk #TheIndustryPortal
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