Liquidity risk

The risk that a counterparty or a participant in a payment or settlement system will not settle an obligation at full value when due. Liquidity risk does not imply that the counterparty is insolvent, since it may be able to settle the required debt obligations at some unspecified time thereafter. The risk of funding liquidity refers to the potential for losses associated with an inability to fund obligations as they come due. Market liquidity risk is the potential inability to sell or unwind positions.