Liquidity conditions in interbank markets are therefore correlated at the global level, because many of the key players are subject to common shocks. Another dimension of the ongoing turmoil is the enhanced interaction between market liquidity and funding liquidity.
Under normal market conditions, market illiquidity is typically short-lived, in particular since it creates profit opportunities for traders who, by providing extra funding liquidity, support the price discovery process and restore the smooth functioning of the market.