Liquidity Coverage Ratio (LCR) requirements

Federal Reserve Proposes Adding Additional Asset Types to Meet LCR Requirements

On May 21, the Federal Reserve Board proposed adding certain general obligation state and municipal bonds to the range of assets a banking organization may use to satisfy the Liquidity Coverage Ratio (LCR) requirements designed to ensure that large banking organizations have the capacity to meet their liquidity needs during a period of financial stress.  Subject to specified limits, the proposed rule would allow investment grade, general obligation U.S. state and municipal bonds to be counted as high-quality liquid assets (HQLA) up to certain levels if they meet the same liquidity criteria that currently apply to corporate debt securities.  ReleaseProposal.