High-Quality Liquid Assets
a.k.a. HQLA
Assets banks can turn into cash quickly and reliably in a crisis, such as central bank reserves and…
In plain English
Assets banks can turn into cash quickly and reliably in a crisis, such as central bank reserves and top-rated government bonds.
Under international banking rules, banks must hold enough high-quality liquid assets to survive a month of stress. Cash, central bank reserves and safe government bonds count most.
The rules aim to stop banks running out of cash in a panic. They also create steady demand for government bonds. See liquidity coverage ratio.
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