Once all that work is complete, the two numbers are divided, and we have the LCR, which is the best way to assess a bank's liquidity position. As an investor, your job is much simpler than the bank's.

Liquidity coverage ratio (LCR) is a requirement under Basel III accords whereby banks must hold sufficient high-quality liquid assets to cover cash outflows for 30 days.

Liquidity Coverage Ratio (LCR) requires banks to maintain High Quality Liquid Assets (HQLAs) to meet 30 days net outgo under stressed conditions. For a better experience, Read this story in our ...