Banks need to hold enough to cover expected demands from depositors. In the wake of the Global Financial Crisis (GFC) the Basel Agreement require commercial banks to keep enough liquid assets, such as cash and government bonds, to get through a 30-day market crisis.

A bank liquidity ratio is a measure of a bank's ability to meet its short-term obligations. It compares a bank's liquid assets, such as cash and cash equivalents, to its short-term liabilities. The most commonly used liquidity ratio in banking is the "quick ratio" or "acid test ratio," which measures a bank's ability to meet its short-term obligations with its most liquid assets. A ratio of 1:1 or higher is considered healthy, indicating that a bank has enough liquid assets to cover its short-term liabilities. A ratio below 1:1 may indicate that a bank is at risk of not being able to meet its short-term obligations in a timely manner.