LCR Calculator

What Is the Liquidity Coverage Ratio (LCR)?

The Liquidity Coverage Ratio (LCR) is a Basel III regulatory requirement that mandates banks to hold sufficient high-quality liquid assets (HQLA) to cover their total net cash outflows over a 30-day stress period. It was introduced after the 2008 financial crisis to ensure banks can withstand short-term liquidity disruptions.

LCR Formula

$$\text{LCR} = \frac{\text{High-Quality Liquid Assets (HQLA)}}{\text{Total Net Cash Outflows (30-Day Stress Period)}} \times 100\%$$

Regulators require an LCR of at least 100%, meaning the bank must have enough liquid assets to fully cover projected 30-day outflows under a stress scenario.

High-Quality Liquid Assets (HQLA)

HQLA are divided into two tiers:

• Level 1 assets: Cash, central bank reserves, and sovereign bonds with 0% risk weight. No haircut applied.
• Level 2A assets: Sovereign bonds with 20% risk weight, agency securities. Subject to a 15% haircut.
• Level 2B assets: Corporate bonds and equities. Subject to haircuts of 25%–50%. Capped at 15% of total HQLA.

LCR vs. NSFR

While the LCR focuses on short-term liquidity (30-day horizon), the Net Stable Funding Ratio (NSFR) addresses longer-term structural liquidity over a one-year period. Together they form the two pillars of Basel III liquidity regulation.

Explore related tools: check out our Liquidity Coverage Ratio Calculator, calculate with the Quick Ratio Calculator, or use the Current Ratio Calculator.