Alphabet Soup: GSE + RMBS= LCR?

So, you forgot the LCR and why you care about it? The liquidity coverage ratio is the most concrete part of the Basel III liquidity standards, defining the high-quality liquid assets (HQLAs) banks must hold against liabilities following various outflow assumptions Basel specifies to anticipate liquidity risk under stress. Technical, for sure; important, absolutely. The liquidity rules are designed to prevent Lehman or Bear Stearns situations – i.e., those in which firms funded long-term obligations with short-term liabilities that left them very, very short when stress undermined market confidence and, with it, the willingness of depositors or other funding sources to ante up.

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