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Liquidity Coverage Ratio (LCR)
A Basel III regulatory requirement that banks hold enough high-quality liquid assets to cover net cash outflows over a 30-day stress period. It ensures banks can survive short-term liquidity disruptions.
Example
“After the 2008 financial crisis, regulators required banks to maintain an LCR of at least 100%, ensuring they hold enough liquid assets to survive a 30-day cash crunch.”