# Liquidity

**Published by:** [Untitled](https://paragraph.com/@0x2d7afa61ecb90f8f2dddc5d4248bfdd31409ecdf/)
**Published on:** 2022-07-30
**URL:** https://paragraph.com/@0x2d7afa61ecb90f8f2dddc5d4248bfdd31409ecdf/liquidity

## Content

Liquidity provision is important because a failure in the payments system could lead to a chain reaction and to a full-fledged systemic crisis. Banks and economic agents are interlocked through their balance sheets, so if “A” cannot pay to “B” because of a liquidity shortage at “A”’s bank, then “B” cannot pay “C”, “C” cannot pay “D”, and so on.

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