A steady increase in financial market liquidity followed by a rapid reduction played a central role in the financial crisis that began in 2007. We present empirical evidence that the marked rise in liquidity in 2001-07 was due to large and persistent current account deficits and loose monetary policy.
Martin, C., & Milas, C. (2010). Financial market liquidity and the financial crisis: An assessment using UK data. International Finance, 13(3), 443-459. https://doi.org/10.1111/j.1468-2362.2010.01269.x