How the LCR Calculator works
The Liquidity Coverage Ratio (LCR) is the core short-term liquidity standard introduced under Basel III. It answers one question: if a bank faced a severe 30-calendar-day funding stress right now, does it hold enough high-quality liquid assets (HQLA) to cover its net cash outflows without emergency support? This calculator applies the standard Basel Committee formula to your own HQLA and cash-flow figures.
The formula
LCR is HQLA divided by total net cash outflows over the next 30 calendar days, expressed as a percentage:
LCR = HQLA / Total Net Cash Outflows × 100%
Total net cash outflows are not simply outflows minus inflows. Basel III caps how much of the projected cash inflows can offset outflows, so that a bank cannot argue its way to zero required liquidity just because it expects large incoming payments:
Total Net Cash Outflows = Total Expected Outflows − min(Total Expected Inflows, Cap% × Total Expected Outflows)
The standard cap is 75%, meaning inflows can offset at most three-quarters of expected outflows — the remaining quarter must be covered by HQLA regardless of how much cash is expected to come in. Regulators generally require LCR ≥ 100%.
Worked example
Take HQLA of $100,000,000, expected 30-day outflows of $120,000,000, and expected 30-day inflows of $40,000,000, with the standard 75% cap. The cap allows up to 0.75 × $120,000,000 = $90,000,000 of inflows to count, and the bank's actual $40,000,000 in expected inflows is below that cap, so the full $40,000,000 is used. Net cash outflows are $120,000,000 − $40,000,000 = $80,000,000. LCR = $100,000,000 / $80,000,000 = 125%, which is above the 100% minimum, leaving a $20,000,000 buffer of HQLA above the required amount.
What moves the ratio most
- HQLA: the numerator. More Level 1 and Level 2 liquid assets (central bank reserves, sovereign debt, certain covered bonds) directly raise the LCR.
- Net cash outflows: the denominator. Larger projected outflows (deposit runoff, wholesale funding maturities, collateral calls) lower the LCR unless HQLA rises to match.
- The inflow cap: because eligible inflows can never exceed a fixed share of outflows, a bank cannot shrink its liquidity requirement below that floor purely by projecting more incoming cash.
Scope and limits
This calculator applies the standard Basel III formula to whatever HQLA, outflow, and inflow figures you enter — it does not classify individual assets into Level 1/2A/2B tiers, apply the Level 2 asset cap (Level 2 assets generally cannot exceed 40% of total HQLA, with Level 2B further capped), or apply the jurisdiction-specific outflow and inflow weightings that determine those totals in a real regulatory filing. Use it to see how the ratio responds to changes in HQLA, outflows, and inflows, and verify final regulatory figures against your supervisor's methodology.