How this calculator works
The liquidity coverage ratio is a Basel III stress test: it asks whether a bank holds enough high-quality liquid assets to survive 30 days of net cash outflows under a specified stress scenario. Assets are counted by quality. Level 1 assets, such as central bank reserves and high-grade government securities, count fully; Level 2 assets count after haircuts and are capped as a share of the total. Outflows are net of contractual inflows, and retail deposits are treated as stickier than wholesale funding. A ratio of 100% or more meets the minimum. This calculator takes the liquid asset total and the net outflow total as inputs, so it does not apply the Basel haircuts, caps or inflow limits for you.
Formula
Liquidity coverage ratio = high-quality liquid assets / net cash outflows over 30 days, displayed as a percentage. High-quality liquid assets needed = target ratio × net cash outflows, and net cash outflows supported = high-quality liquid assets / target ratio. The surplus is high-quality liquid assets minus net cash outflows.
Worked example
Cash and reserves of $50, marketable securities of $100 and other highly liquid assets of $20 give $170 of liquid assets. Against $120 of net outflows the ratio is 141.6667%, a surplus of $50. To reach 120% against $120 of outflows a bank would need $144 of liquid assets.
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Frequently asked questions
Does this apply the Basel asset haircuts?
No. Enter assets already weighted using the Basel rules: Level 1 at full value, Level 2A and 2B after their haircuts, and subject to the Level 2 caps. The tool then divides the total by net outflows.
What counts as a net cash outflow?
The Basel scenario applies run-off rates to different funding categories and caps inflows at 75% of outflows. The result is a weighted outflow total, not the contractual amount of deposits maturing within 30 days.
Why 30 days?
The Basel framework assumes a bank must be able to meet its obligations for a month without new funding, giving supervisors and the bank time to respond. Longer stress horizons are covered by the net stable funding ratio.