3.1 Liquidity Coverage Ratio (LCR)

This ratio addresses the short-term liquidity needs of a bank or financial institution during a stressful situation. It estimates whether the stock of high-quality liquid assets is sufficient to cover the net cash outflows under stress situations over a specified future period, in general, lasting 30 calendar days (or LCR horizon). LCR is calculated at the legal entity level, on a standalone and consolidated basis.

The LCR as prescribed by the HKMA is required to be reported by all institutions designated as Category 1 by the Hong Kong Monetary Authority.