What are all these Acronyms?

Q What is the LCR?

A The Liquidity Coverage Ratio is a measure intended to decide how big a buffer of liquid assets a bank needs to survive a month-long squeeze. The bank will be able to sell the assets in the buffer to cover the outflow of cash in the tough period, relying on its own assets rather than the central bank.


A Residential mortgage backed securities are assets made up of a bundle of mortgages. They got a bad name in the crisis, but high quality ones are fundamentally strong and based on real underlying assets. But they are not considered as strong as, say, government bonds, so banks will only be allowed a small number in the buffer.

Q What about HQLA?

A The buffer must be made of high-quality liquid assets – that is, assets that they can sell even in a crisis, and which are not tied up as, say, collateral in other deals.