Overview of U.S. Liquidity Coverage Ratio Proposal
- The Federal Reserve, OCC and FDIC have issued a proposal to implement the Basel III liquidity coverage ratio (LCR) in the United States.
- Part of the Basel III liquidity framework, the LCR requires a banking organization to maintain a minimum amount of liquid assets to withstand a 30-day standardized supervisory liquidity stress scenario.
- The U.S. LCR proposal is more stringent than the Basel Committee’s LCR framework in several significant respects.
- The U.S. LCR proposal contains two versions of the LCR:
- A full version for large, internationally active banking organizations.
- A modified, “light” version for other large bank holding companies and savings and loan holding companies (depository institution holding companies).
- The proposed effective date is January 1, 2015, subject to a two-year phase-in period.
- The comment period for the proposal ends on January 31, 2014.
Which Organizations Are Affected?