Liquidity Coverage Ratio

Summary

This practice note discusses key regulatory reforms proposed by the Basel Committee on Banking Supervision (BCBS) and liquidity requirements the BCBS introduced for internationally active banks under the Basel III accords. In particular, this practice note focuses on the U.S. liquidity coverage ratio (LCR) and the U.S. net stable funding ratio (NSFR) rules, each of which were implemented in response to Basel III as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). Aspects of the LCR were revised under the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), which scales back provisions of the Dodd-Frank Act and was signed into law on May 24, 2018.