The need for liquidity does not arise in the perfect and utopian world of general equilibrium with Arrow’s debt contracts or complete calculable contingent claims. Also, as Hicks pointed out, liquidity demand does not appear in traditional portfolio analysis, which he tried to expand by adding a liquidity preference complement.
It started with the liquidity crisis triggered by the collapse of Lehman Brothers in September 2008. Funding markets for banks came to a sudden stop. In response, the ECB – in concert with its counterparts around the world – reacted swiftly.