WASHINGTON — Federal Reserve Gov. Jeremy Stein Friday said an important but little known regulatory anti-crisis mechanism is the kind of rule still being developed that enforces a liquidity requirement on banks so that they can raise a lot of cash fast if necessary without unnecessary ripple effects.

What is known as the Liquidity Coverage Ratio ensures "that banks have an adequate stock of unencumbered high-quality liquid assets that can be converted easily and immediately in private markets into cash to meet their liquidity needs for a 30 calendar-day liquidity stress scenario," he said.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.