The more prominent role of debt markets and NBFI has made funding and market liquidity morecentral to the capacity of the NBFI sector, and the financial system at large, to absorb shocks of different types. Large shifts in the demand for, and supply of, liquidity may result in liquidity imbalances, for instance as market participants seek to increase cash holdings while at the same time liquidity supply may decline due to deleveraging and reduction of market making services. If such imbalances become sufficiently pervasive, deteriorating liquidity conditions may create risks to financial stability.