due to reductions in cash-inflows and unexpected refinancing requirements) on its interbank counterparties. Third, asset fire sales can lead to a market meltdown under certain circumstances, which in turn decreases the counterbalancing capacity of all banks and, consequently, their liquidity risk-bearing capacity.
In the potential emergence of a liquidity crisis, central banks need to assess the scale of the liquidity problem and the potential systemic implications of liquidity stress 5 . 2  ECB, Glossary; http://www.ecb.eu/home/glossary/html/glossl.en.html. 3  LAMFALUSSY Alexandre Baron de, Central banks and financial stability, 2cd Pierre Werner Lecture, 26 October 2004, Luxembourg p. 3; http://www.bcl.lu/fr/media/discours/2004/20041026/index.html. 4  ECB, Glossary, http://www.ecb.eu/home/glossary/html/glosss.en.html.