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Liquidity Coverage Ratio Calculator

Written by:
PK

On this page is a bank liquidity coverage ratio calculator. Enter the bank's high-quality liquid assets (HQLAs) and net cash flows to compute its liquidity coverage ratio.

Liquidity Coverage Ratio Calculator

What is the liquidity coverage ratio?

The liquidity coverage ratio ensures banks have adequate high-quality assets to meet liquidity needs for a certain amount of time. The requirements come out of Basel III, and banks are currently required to maintain a liquidity ratio of greater than 100%, which implies then can meet liquidity needs for at least 30 days.

Both the minimum requirement (ratio and date) change from time to time, as does the definition of "high-quality liquid assets". Be sure to visit the above linked Basel III site for the latest, and read the US Federal Reserve's take, here.

Liquidity Coverage Ratio Formula

The liquidity coverage ratio formula is:

liquidity\ coverage\ ratio=\frac{HQLA}{Total\ Net\ Cash\ Flows}

Where:

  • HQLA – High-quality liquid assets, as defined by Basel III.
  • Revenue – The total net cash flows a band estimates could outflow in a 30 day stressed scenario.

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PK

PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK is in his mid-30s and works and lives in the Bay Area with his wife, two kids, and dog.

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