Large Bank Examination Workshop February 2026

Liquidity Coverage Ratio (LCR) • A liquidity requirement is a sensible response to the liquidity run of 2008 but what is the cost of the requirement? • How much HQLA will banks have to raise and hold on balance sheet to meet the requirement? • What does this mean in terms of liquidity and availability of fixed income instruments that don’t qualify as HQLA?  Will Banks be less likely to make a market/maintain inventory?

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Liquidity Coverage Ratio (LCR) (cont’d)

High Quality Liquid Assets (HQLAs)

Level 2A HQLAs

Level 2B HQLAs

Level I HQLAs

₊

₊

₌

₌

LCR

Total Cash Inflows (<75% of outflows)

Net Cash Outflows

Total Cash Outflows

₋

58

© Global Financial Markets Institute Inc.

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