Finance English
Analysis

What is Liquidity Buffer?

Liquidity Buffer A reserve of highly liquid assets held to meet short-term obligations or cover unexpected cash outflows, as required by regulatory standards such as Basel III LCR and operational risk management frameworks.

Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework

How is “Liquidity Buffer” Used in Practice?

Banks are required to maintain a liquidity buffer to ensure they can meet withdrawal demands during periods of market stress as mandated by Basel III.

Certification Exam Relevance

CFAACCAFRM

Who Needs to Know This Term?

  • Financial Analysts
  • Bankers
  • Traders

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Frequently Asked Questions

What is Liquidity Buffer?

A reserve of highly liquid assets held to meet short-term obligations or cover unexpected cash outflows, as required by regulatory standards such as Basel III LCR and operational risk management frameworks.

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