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ERM Glossary: Liquidity risk

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There are two main types of liquidity risk:

 

Funding liquidity risk

 

This is the risk that money markets will not be able or willing to supply funding to the entity in question

 

Asset liquidity risk

 

This is the risk that there will be insufficient capacity in markets to handle asset transactions when the entity wants to transact without a material impact on price.

 


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