Which of the following is a characteristic of the 'Liquidity Coverage Ratio' under Basel III?
A. It applies only to non-bank financial institutions
B. It measures only long-term funding stability
C. It is related only to capital adequacy
D. It requires banks to hold sufficient high-quality liquid assets to cover net cash outflows over 30 days
Answer: Option D
Solution (By JKSSB Mock Tests)
The Liquidity Coverage Ratio (LCR) requires banks to maintain an adequate stock of unencumbered high-quality liquid assets that can be converted into cash to meet liquidity needs for a 30-calendar-day stress scenario.
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