The second factor is to ensure that liquidity problems do not turn into solvency issues.11 Thus, a second measure to foster interbank market activity is to ensure its liquidity.12 Finally, a further reason for market activity not to pick up is related to network problems.
If one side of the market is basically non-existent – I am referring to the lending side of the term market – then this may reduce the incentive for participants to be the first one to act.