# Liquidity Coverage Ratio

*Banking & Payments — Finicade finance glossary*

The liquidity coverage ratio requires a bank to hold enough high-quality liquid assets to survive 30 days of severe outflows. It was Basel III's answer to a lesson from 2008: institutions that failed were often adequately capitalised and simply ran out of cash. Its assumed outflow rates are calibrated to historical runs, which the 2023 failures suggested may be too slow for the digital era.

**Also known as:** LCR, liquidity buffer, NSFR

**Related terms:** [Liquidity Risk](https://finicade.com/glossary/liquidity-risk), [Basel Rules](https://finicade.com/glossary/basel-rules), [Wholesale Funding](https://finicade.com/glossary/wholesale-funding), [Bank Run](https://finicade.com/glossary/bank-run), [Capital Adequacy Ratio](https://finicade.com/glossary/capital-adequacy-ratio)

Source: https://finicade.com/glossary/liquidity-coverage-ratio