Reference

Liquidity at risk considers several key factors when assessing a country's liquidity position. These include:

1. Access to Funds: Assessing how easily a country can obtain funds from various sources, such as international reserves, foreign investments, or loans.

2. Cost of Funding: Evaluating the expenses associated with obtaining this liquidity, which could include interest rates or risk premiums.

3. Funding Liquidity Risk: This involves examining the risk that a country might not meet its short-term financial obligations due to a lack of liquid assets or access to cash.

4. Market Liquidity: It also considers the ease with which assets can be sold in the market without affecting their price adversely. This helps understand how quickly a country can convert its assets to cash if needed.

5. Central Bank Liquidity: The capability of the central bank to provide liquidity to the financial system is vital, ensuring stability and confidence within the economy.

6. Economic Conditions: The broader economic environment, including known and reasonably anticipatable conditions that might impact liquidity, must also be considered.

These factors collectively help assess the potential risks and strategies a country might employ to manage its liquidity effectively.

Additionally, here are some relevant images that could help visualize liquidity risk:

For further reading, you can visit the articles on Investopedia and Risk Officer.