What Is the Purpose of the Liquidity Coverage Ratio

question 49

Multiple Choice

What is the purpose of the Liquidity Coverage Ratio?

• A) to mitigate market replacement risk across markets
• B) to eliminate funding mismatches by establishing a minimum acceptable amount of stable funding
• C) to ensure that banks have enough high-quality liquid assets to survive a 30-day period of acute market stress
• D) to minimize duration risk on a bank's assets over a one-year horizon

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Definitions:

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The ability to process two or more responses or react to two or more different demands simultaneously.

Automatization

The process by which skills and procedures are practiced until they can be performed quickly and without much conscious thought.

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