In fact, Markus Brunnermeier and his co-authors have impressively shown in a seminal paper that, if left unchecked, a dry-up of market liquidity and funding liquidity can be mutually reinforcing and lead to a hazardous downward spiral.
2 For instance, the Securities Markets Programme and the Covered Bond Purchase Programme have helped to reduce the liquidity risk in the government bond and the covered bond market, respectively.