What is the minimum acceptable LCR under Basel III?

Basel III requires a minimum LCR of 100%, meaning banks must hold at least as much HQLA as their projected net cash outflows over a 30-day stress period.

What counts as a Level 1 HQLA asset?

Level 1 assets include cash, central bank reserves, and certain sovereign or central-bank-issued securities with 0% risk weight under Basel II. They carry no haircut and face no cap within HQLA.

How often must banks report their LCR?

Under the final Basel III rules, large internationally active banks report LCR monthly (and must monitor it daily internally). National regulators may impose more frequent public disclosure.

Liquidity Coverage Ratio (LCR) Calculator

Calculate the Liquidity Coverage Ratio (LCR) required under Basel III. The LCR ensures banks hold enough high-quality liquid assets to survive a 30-day stress scenario.

By AbraCalc Editorial Team · Reviewed by AbraCalc Methodology Review · Last reviewed: 2026-06-25

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How to use this tool

Enter high-quality liquid assets (hqla) and net cash outflows (30-day stress) in the fields above.
Results update instantly as you type — or click Calculate.
Read your liquidity coverage ratio (lcr) and the full breakdown beneath it.

⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.

Formula

LCR = (HQLA ÷ Net Cash Outflows over 30 days) × 100

Basel III minimum requirement: LCR ≥ 100%

HQLA includes Level 1 assets (cash, central bank reserves, sovereign bonds) and haircut-adjusted Level 2 assets.

How it works

The Liquidity Coverage Ratio was introduced under the Basel III framework to ensure banks maintain a sufficient stock of unencumbered high-quality liquid assets to meet their liquidity needs for a 30-day stress scenario. Net cash outflows are calculated by applying prescribed run-off rates to different liability categories (retail deposits, wholesale funding, committed facilities) and inflow rates to expected cash receipts.

A ratio of 100% or above means the bank can cover projected outflows for 30 days without accessing markets. Regulators typically require a buffer above 100% and may impose restrictions when the LCR falls below the minimum.

Worked example

Bank with $500M HQLA and $400M net outflows

HQLA (cash + sovereign bonds, after haircuts) = $500 million
Net cash outflows in 30-day stress scenario = $400 million
LCR = $500M ÷ $400M × 100 = 125%
Surplus HQLA = $500M − $400M = $100M above the minimum requirement

LCR of 125% exceeds the Basel III minimum of 100%, indicating a $100M liquidity surplus.

Common mistakes to avoid

Treating Level 2B assets (certain equities, non-agency MBS) as if they carry no haircut — Basel III requires a 50% haircut on Level 2B, meaning their HQLA value is half the market value.
Using gross cash outflows instead of net outflows: the LCR denominator is net cash outflows (gross outflows minus qualifying inflows, capped at 75% of outflows), not gross alone.
Ignoring the cap on Level 2 assets: Level 2 assets (haircut-adjusted) cannot exceed 40% of total HQLA, so simply summing all liquid assets at face value overstates the buffer.

Key terms

What are High-Quality Liquid Assets (HQLA)?: HQLA are assets that can be quickly converted to cash with minimal loss of value. Level 1 HQLA (cash, central bank reserves, high-rated sovereign bonds) receive no haircut; Level 2A and 2B assets receive 15% and 25–50% haircuts respectively.
What is the Basel III LCR minimum?: Basel III requires banks to maintain an LCR of at least 100%, meaning HQLA must cover at least 100% of net cash outflows over a 30-day stress period. This minimum was phased in and fully implemented in 2019.
What counts as a net cash outflow for LCR?: Net cash outflows = stressed outflows minus stressed inflows (capped at 75% of outflows). Outflows are calculated by applying regulatory run-off rates (e.g., 3–10% for stable retail deposits, up to 100% for certain wholesale funding).
Who must comply with LCR requirements?: In the U.S., full LCR requirements apply to large internationally active banking organizations (generally those with $250B+ in assets or $10B+ in foreign exposure). Modified LCR rules apply to mid-size banks under U.S. banking regulations.

Frequently asked questions

What is the minimum acceptable LCR under Basel III?: Basel III requires a minimum LCR of 100%, meaning banks must hold at least as much HQLA as their projected net cash outflows over a 30-day stress period.
What counts as a Level 1 HQLA asset?: Level 1 assets include cash, central bank reserves, and certain sovereign or central-bank-issued securities with 0% risk weight under Basel II. They carry no haircut and face no cap within HQLA.
How often must banks report their LCR?: Under the final Basel III rules, large internationally active banks report LCR monthly (and must monitor it daily internally). National regulators may impose more frequent public disclosure.