What Basel III ratio is calculated as high-quality liquid assets divided by total net cash outflows over 30 days?

The Basel III ratio calculated as high-quality liquid assets divided by total net cash outflows over 30 days is the liquidity coverage ratio.

The LCR is a short-term liquidity stress test. Its numerator consists of high-quality liquid assets, or HQLA, such as qualifying cash and highly liquid securities that can be sold or pledged quickly with limited loss of value. The denominator is projected net cash outflows during a 30-day stress period: expected outflows minus permitted inflows under regulatory assumptions.

Basel III developed the ratio after the 2007–2008 global financial crisis, when some banks were solvent on paper but could not meet immediate funding demands. The standard is generally expressed as HQLA divided by 30-day net cash outflows, with a target of at least 100% under normal regulatory conditions.

The LCR is not the same as the net stable funding ratio. LCR focuses on surviving a severe liquidity squeeze for 30 days; NSFR examines whether funding is stable enough over a longer, approximately one-year horizon. During genuine market stress, regulators may permit temporary breaches.