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ARTICLE · 18 SEPTEMBER 2014

US Federal Banking Regulators Finalize Liquidity Coverage Ratio

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The Federal Reserve Board, the FDIC, and the OCC finalized a rule to establish a standardized minimum liquidity requirement for large and internationally active banks.

United StatesFinance and Banking
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On September 3, 2014, the Federal Reserve Board, the FDIC, and the OCC finalized a rule to establish a standardized minimum liquidity requirement for large and internationally active banking organizations. Pursuant to the rule, each institution must hold high quality, liquid assets ("HQLA") that can be converted easily into cash in an amount equal to or greater than its projected cash outflows minus its projected cash inflows during a 30-day stress period.

The ratio of the firm's liquid assets to its projected net cash outflow, its "liquidity coverage ratio" or "LCR," applies to all banking organizations with $250 billion or more in total consolidated assets or $10 billion or more in on-balance sheet foreign exposures. The LCR also applies to these banking organizations' subsidiary depository institutions that have assets of $10 billion or more. A less stringent, modified LCR will apply to bank holding companies and savings and loan holding companies that do not meet

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