High-quality liquid assets can be converted into cash without losing much value under stress and without obstacles to conversion, such as cash, central bank deposits, and government bonds. Net cash outflows are the cash outflows over 30 days minus the cash inflows1.

Consider a hypothetical example in which liquid assets are 12 trillion yen and net cash outflows are 10 trillion yen. The LCR is 120%. If net cash outflows rise to 13 trillion yen, it falls to about 92%, below 100%. In Japan, it has applied in stages since 2015 to banks under the international standard.

Notes

  1. Financial Services Agency, "バーゼル規制の概要" (Overview of the Basel framework, our translation) (August 2026), page 7, "流動性カバレッジ比率（LCR）" (Liquidity coverage ratio (LCR)) (in Japanese). ↩