Funding Liquidity

Funding liquidity refers to the ease with which individuals, companies, or financial institutions can obtain cash or liquid assets to meet their short-term obligations, like paying bills or servicing debt. It reflects the availability of funding in the financial system, influenced by factors such as credit access, market conditions, and confidence. When funding liquidity is abundant, borrowing is easier and cheaper; when it dries up, it becomes difficult and costly to secure cash, which can lead to financial stress or crises. Essentially, it measures how smoothly funds can flow within the economy and financial markets to keep everyone financially operational.