The loop is then closed when lower asset prices and lower market liquidity lead to higher collateral requirements in the money-market, which in turn increase funding liquidity risk, contribute to further asset sales and increase the probability of a downward liquidity spiral. 4  BIS Review 59/2009  What is the subordinated aim of liquidity supervision?
The importance of liquidity supervision in ensuring confidence in the currency and in the financial system The current crisis is a liquidity crisis and thus a crisis of confidence. In January the EU Commission registered the lowest confidence rate ever measured in the Eurozone 17 .