Liquidity Coverage Ratio - LCR

Banks are all about money. What did famous 1930s criminal Willie Sutton say when he was asked why he robbed banks? “That’s where the money is.”

Regulators require banks to have money. One of the criteria used to enforce these rules: the liquidity coverage ratio.

The LCR represents the amount of liquid assets necessary to fund cash outlays for 30 days. Basically, a bank needs to have access to an amount of money on hand (liquid assets being those that can quickly and easily get turned into cash) needed to run its business for a 30-day period.