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Understanding the New Liquidity Coverage Ratio Requirements

Author

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  • Mark House
  • Timothy Sablik
  • John R. Walter

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.

Suggested Citation

  • Mark House & Timothy Sablik & John R. Walter, 2016. "Understanding the New Liquidity Coverage Ratio Requirements," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, issue Jan.
    • Handle: RePEc:fip:fedreb:00036
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    File URL: https://www.richmondfed.org/-/media/richmondfedorg/publications/research/economic_brief/2016/pdf/eb_16-01.pdf
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    Cited by:

    1. Gara Afonso & Roc Armenter & Benjamin Lester, 2019. "A Model of the Federal Funds Market: Yesterday, Today, and Tomorrow," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 33, pages 177-204, July.
    2. Jane E. Ihrig & Edward Kim & Cindy M. Vojtech & Gretchen C. Weinbach, 2019. "How Have Banks Been Managing the Composition of High-Quality Liquid Assets?," Review, Federal Reserve Bank of St. Louis, vol. 101(3).

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