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2016•RePEc: Research Papers in EconomicsRequires access

Understanding the New Liquidity Coverage Ratio Requirements

Mark C. House, Timothy Sablik, John R. Walter

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Abstract

In 2014, U.S. financial regulators introduced new liquidity coverage ratio requirements for qualified banking institutions. This regulation, based on guidelines from the Basel III accord, requires that banks hold minimum levels of liquid assets to withstand a period of financial stress. It is a response to the financial crisis of 2007?08, during which many banks found themselves suddenly cut off from short-term funding. But the impact of liquidity requirements remains an area of ongoing debate and economic research.

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In 2014, U.S. financial regulators introduced new liquidity coverage ratio requirements for qualified banking institutions. This regulation, based on guidelines from the Basel III accord, requires that banks hold minimum levels of liquid assets to withstand a period of financial stress. It is a response to the financial crisis of 2007?08, during which many banks found themselves suddenly cut off from short-term funding. But the impact of liquidity requirements remains an area of ongoing debate and economic research.

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OpenAlex reports 7 citations for this work. Citation counts describe recorded attention and do not establish research quality.

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Available abstract

In 2014, U.S. financial regulators introduced new liquidity coverage ratio requirements for qualified banking institutions. This regulation, based on guidelines from the Basel III accord, requires that banks hold minimum levels of liquid assets to withstand a period of financial stress. It is a response to the financial crisis of 2007?08, during which many banks found themselves suddenly cut off from short-term funding. But the impact of liquidity requirements remains an area of ongoing debate and economic research.

Key concepts: Basel III, Market liquidity, Financial system, Business, Liquidity risk, Financial crisis, Too big to fail, Liquidity crisis

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